In the complex backdrop of a continuously reshaping global geopolitical landscape and persistent inflationary pressures, Goldman Sachs has significantly raised its forecast for global central bank gold purchases and reaffirmed its bullish year-end gold price target of $5,400 per ounce. This assessment aligns with a wave of optimistic signals recently released by several international investment banks, injecting confidence into the gold market after months of volatility.
Analysts Lina Thomas and Daan Struyven at Goldman Sachs stated in a report dated May 15th that they expect global central bank gold purchases to increase to an average of 60 tonnes per month by 2026. Notably, this new forecast stems from a substantive revision to their methodology. Based on a revised cumulative estimation framework, the 12-month moving average for central bank purchases in March has been significantly raised from a previous estimate of 29 tonnes to 50 tonnes. Goldman Sachs explained that the prior estimation method partially relied on fund flow assumptions from UK trade data, which may have "no longer fully reflected" market changes, prompting the update. This suggests that a portion of central bank buying activity, previously underreported or missed, is now coming into clearer market view.
Furthermore, the analysts cited an internal survey indicating that central banks have "a strong underlying demand for gold, and recent geopolitical developments may further strengthen their diversification motives over time." Although survey details were not fully disclosed, this statement implies that, in the current international political and economic landscape, the strategic role of gold in official reserves is being redefined.
**Central Bank Gold Rush: World Gold Council Corroborates Official 'Stockpiling' Trend** Goldman Sachs's assessment of official sector activity follows closely on the heels of an optimistic report from the World Gold Council (WGC). The WGC's Q1 2026 "Global Gold Demand Trends" report, released on April 29th, showed that global central banks were net purchasers of 244 tonnes of gold in the first quarter, a 3% year-on-year increase, exceeding the previous quarter's level and the five-year average. Despite increased sales from a few official institutions, the overall central bank buying trend remained robust. Total global gold demand (including over-the-counter activity) reached 1,231 tonnes in Q1, up 2% year-on-year, with the total demand value surging to a record $193 billion, a 74% increase. Among the disclosed data, Poland, Uzbekistan, and China were the largest purchasers, though purchases by some other central banks were not publicly reported. The WGC forecasts full-year 2026 central bank purchases to remain within a range of 700 to 900 tonnes.
Regarding China, its central bank has increased its gold reserves for 18 consecutive months. As of the end of April 2026, China's gold reserves reached 74.64 million ounces, with a single-month increase of 260,000 ounces in April, marking an acceleration in the pace of accumulation. Analysis suggests three key reasons behind the accelerated purchases: evolving geopolitical risks, a phase of price correction providing a favorable buying window, and the bolstering of gold reserves creating favorable conditions for the internationalization of the Renminbi.
Analysts widely agree that the core logic for central bank buying is reserve diversification and de-dollarization. It is noted that the trend of global central bank gold purchases remains structurally resilient, with the gold reserve share of emerging market central banks still significantly lagging behind that of developed nations, suggesting this cycle of central bank accumulation is far from over. Other forecasts estimate 2026 official sector purchases at approximately 800 to 850 tonnes, slightly below the 863 tonnes in 2025 but still at historically high levels.
**Why Did the 'War Equals Gold Rush' Adage Falter? The Complex Tug-of-War Between Geopolitics and Inflation** Since the outbreak of conflict in the Middle East, gold's performance has been volatile, with its traditional safe-haven logic facing significant challenges in this round of geopolitical tension. After hitting a record high of $5,626.80 per ounce on January 29th, spot gold prices underwent a sharp correction of approximately $800. As of Monday, May 18th, spot gold was trading near $4,534 per ounce, well below the January peak.
Why did the traditional logic fail to sustain this time? The answer lies in market forces that temporarily took precedence over safe-haven flows: inflation and interest rates. Since the US-Iran conflict escalated in late February, international oil prices have continued to climb, with disruptions in the Strait of Hormuz persistently impacting global energy supply. The US Consumer Price Index (CPI) for April rose 3.8% year-on-year, a near three-year high, indicating a clear trend of reaccelerating inflation. Stalled diplomatic talks between the US and Iran suggest oil prices may remain elevated in the near term, potentially worsening inflation in the coming months.
Expectations of rebounding inflation directly reversed the previous market optimism regarding sustained Federal Reserve rate cuts. On March 19th, the Fed announced it would maintain the federal funds rate target range at 3.5% to 3.75%. Previously, the market widely anticipated the Fed would begin a sustained cutting cycle in 2026, a core driver behind gold's earlier rally. However, the timing of potential cuts has been continuously delayed, the expected magnitude of cuts reduced, and real US dollar interest rates have risen, with market pricing even incorporating expectations of a rate hike. Data indicates the probability of a Fed rate hike within the year has risen to approximately 40%.
Rising rate hike expectations pose a direct headwind for gold—as a non-yielding asset, its relative attractiveness diminishes in a rising rate environment. Of particular note is the official appointment of Kevin Warsh as Federal Reserve Chair on May 15th. He faces a stagflation-like scenario—slowing growth coupled with rising inflation—and the most severe internal dissent within the FOMC in 34 years, with 4 of the 12 voting members dissenting on the policy statement. This implies heightened uncertainty regarding the direction of monetary policy.
Simultaneously, safe-haven capital flows have undergone a structural shift. Funds have not flooded into gold on a large scale but have instead shown a preference for more liquid and yield-bearing US dollar assets. A sell-off in global bond markets has also added pressure to non-yielding gold. On May 15th, following the deadlock in US-Iran talks, the international gold market experienced another significant correction, with prices quickly falling below the $4,600 per ounce level.
**Tension Between Short-Term Risks and Long-Term Bullish Logic: Liquidity Drain Concerns vs. Long-Term Demand Visibility** It is worth noting that Goldman Sachs is not the only institution bullish on gold in the long term. Recently, several top international investment banks have密集 released optimistic gold forecasts, forming a strong chorus of bullish sentiment: - UBS maintains a year-end 2026 gold price target of $5,600 per ounce while also forecasting silver to reach $100 per ounce. Following a mark-to-market adjustment in Q1, UBS slightly revised its 2026 average gold price forecast from $5,200 to $5,000 but firmly maintained its $5,600 year-end target. - ANZ expects gold prices to rise to $5,800-$6,000 per ounce by year-end, arguing that gold's safe-haven and store-of-value qualities will become more prominent as an energy crisis constrains economic growth. - Meanwhile, JPMorgan Chase, Wells Fargo, and Bank of America all forecast gold reaching between $6,000 and $6,300 per ounce by year-end.
Despite the clarity of the long-term bullish narrative, Goldman Sachs remains cautious on the short-term outlook. The report specifically points out that gold is "a natural source of funding for private investors facing liquidity needs—for example, if equities sell off in an environment of higher rates and weaker growth expectations." This warning is noteworthy. Since May, gold market volatility has exceeded that of the US stock market, reflecting highly divergent investor sentiment. The World Gold Council also cautions that while central bank demand remains structurally solid, recent market volatility reminds investors that gold, under extreme stress, could also face selling pressure to meet liquidity needs.
Comments