Gold prices have retraced 13%, but Goldman Sachs remains bullish: central banks will accelerate gold purchases again, and by the end of the year, prices could reach $5,400!

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Source: Wall Street Insights

Goldman Sachs believes this drop in gold “has clearly become overextended,” with the market overestimating inflation and underestimating downside pressure from growth; as prices stabilize, it expects the central bank’s gold-buying activity to pick up again, with average monthly purchases of about 60 tons; together with hopes for another two rate cuts this year, it maintains its 2026-end gold price target of $5,400 per ounce.

Since the outbreak of the Iran war, gold has fallen cumulatively by 13%, but Goldman Sachs still holds a bullish stance, expecting gold to return to an upward trend before year-end, with a target price of $5,400 per ounce.

In its latest report, Goldman analysts Lina Thomas and Daan Struyven pointed out that the medium-term outlook for gold remains intact; sustained central bank buying and the expectation that the Federal Reserve could implement two more rate cuts this year will become the core drivers behind a rebound in gold prices.

They also concede that in the short term, gold still faces “tactical downside risk”; if energy supply shocks continue to worsen, gold could fall to $3,800 per ounce.

The firm believes this round of correction has “gone too far,” with the market overly focused on inflation pressure while ignoring the drag from economic growth; historical experience suggests that concerns on the growth front will ultimately dominate the direction of the market, meaning that the current gold price has already fully priced in—and even overdrawn—negative factors.

Causes of the pullback: forced de-risking combined with tighter monetary policy expectations

Since the outbreak of the war, gold prices have fallen cumulatively by 13% in about a month. This selloff is attributed to two factors: first, a sharp drop in the stock market forced investors to liquidate gold positions passively due to liquidity needs; second, the market began to price in more tightening monetary policy expectations.

The two analysts emphasized that the magnitude of this repricing has “clearly been overdone.” The root cause is that the market has overestimated the weight given to the inflation channel while underestimating the effect of downside pressure from economic growth.

They noted that, looking back at historical patterns, growth concerns ultimately will become the dominant variable driving gold’s performance, and the current price level already implies a relatively large scope for recovery.

Central bank buy-side: official departments to reaccelerate their entry

Goldman Sachs expects that as price volatility gradually stabilizes in the medium term, central banks’ gold purchases will pick up again, with average monthly procurement of about 60 tons. This forecast is based on the assumption that investment by the private sector stays at its current level and does not add further incremental demand.

External parties previously worried that some central banks might support their own currencies by selling gold, but this report takes a clear negative view.

The report states that Gulf-region countries, because they “generally adopt a U.S. dollar peg exchange-rate regime,” are more inclined to carry out exchange-rate intervention by selling U.S. Treasuries rather than selling gold reserves. This assessment implies that market concerns about central banks collectively reducing their gold holdings are clearly overstated.

Bullish and bearish scenarios: two-way risks amid geopolitical games

The report also outlines gold price trajectories under two extreme scenarios.

On the downside scenario, if energy supply shocks continue to intensify, there is a risk that gold could fall to $3,800 per ounce; on the upside scenario, if the Iran conflict drives more capital to accelerate its exit from “traditional Western assets,” enabling diversified allocations, the upside potential for gold would be quite significant.

The report keeps unchanged its 2026-end gold price target of $5,400 per ounce. The two key supports are: ongoing central bank gold buying and the prospect of two rate cuts by the Federal Reserve within the year.

The firm believes that although near-term geopolitical tensions create volatility, from a medium-term perspective, their structural effect of promoting asset diversification will become an important catalyst for gold price upside.

Risk notice and disclaimer terms

The market involves risk; investment requires caution. This article does not constitute personal investment advice, and it does not consider any specific investment objectives, financial situations, or needs of individual users. Users should consider whether any opinions, viewpoints, or conclusions in this article align with their specific circumstances. Invest accordingly; responsibility lies with the investor.

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责任编辑：朱赫楠