Goldman Sachs Sees Gold Climbing to $4,900 by Year-End as Central Bank Buying Accelerates

What happened

Goldman Sachs Research is telling clients to expect gold to keep climbing toward $4,900 an ounce by the end of 2026, and the bank's own commodities team says the reason has less to do with traders than with governments. In a research note built around the bank's internal tracking model, Goldman strategists Lina Thomas and Daan Struyven estimate that central banks bought gold at a pace of roughly 100 tonnes a month in June, on a three-month seasonally adjusted basis -- up sharply from about 66 tonnes the month before, and more than five times the average of 17 tonnes a month that central banks bought in the years before 2022. China was the largest identifiable buyer that month.

Goldman had actually pulled its year-end target back once already this year, trimming it from $5,400 to $4,900 in June after concluding that Federal Reserve interest-rate cuts would arrive later than it had assumed -- the bank now pencils in cuts in March 2027 and December 2027 rather than sooner. Even with that downgrade, the bank's own updated tracking of vault flows out of London -- gold that moved out of storage in excess of what official UK trade statistics could explain -- convinced its analysts that unrecorded sovereign buying is running higher than earlier estimates showed, which is why the central bank piece of the forecast has stayed firm even as the rate-cut piece moved against it.

The details

Goldman's call rests on a distinction worth spelling out: this is not a forecast about traders getting more bullish on gold as a hedge. It is a forecast about a specific class of buyer -- central banks -- adding to reserves for reasons that have little to do with the day's headlines and a lot to do with a decision many of them made after 2022, when the United States and its allies froze roughly $300 billion of Russia's foreign-exchange reserves in response to the invasion of Ukraine. For a reserve manager in Beijing, New Delhi or Ankara, that event was a demonstration that dollar and euro-denominated assets can be frozen by political decision, in a way physical gold sitting in a national vault cannot. Goldman's own strategists, Lina Thomas and Daan Struyven, frame the resulting shift as structural rather than cyclical -- a slow reallocation of reserves away from being dollar-heavy, not a short-term trade that reverses when sentiment changes.

The tonnage numbers are what make the case concrete rather than speculative. Goldman's nowcast -- a model built to estimate current central bank activity before official reserve data catches up, using proxies like vault withdrawals and trade-flow gaps -- put the pace at around 100 tonnes a month in June on a three-month seasonally adjusted basis, up from about 66 tonnes in May. Measured against the roughly 17 tonnes a month that central banks bought on average in the years before 2022, that is a more than fivefold increase in buying intensity, sustained now for several years rather than a single quarter's blip. China was the single largest identifiable buyer in June, consistent with the People's Bank of China's own pattern of adding to reserves through 2026.

What makes this update noteworthy on its own, rather than a repeat of an already-known theme, is the methodology behind it. Central banks do not have to disclose gold purchases in real time, and many understate or delay what they report. Goldman's team found that gold leaving London vaults -- the world's largest hub for physically stored bullion -- has been running ahead of what official UK export statistics can account for, and concluded the gap represents sovereign buyers moving gold without it showing up promptly in trade data. Layering that discrepancy into its tracking model is what let Goldman revise its estimate of the current buying pace upward, even in the same research cycle where it lowered its price target.

That apparent contradiction -- a lower price target alongside a higher estimate of the demand driving it -- is explained by the other half of Goldman's math: interest rates. Gold pays no yield, so its relative appeal rises and falls with the path of the US Federal Reserve's policy rate; the closer and larger the expected rate cuts, the more attractive a non-yielding asset like gold becomes against Treasuries or cash. Goldman's June revision, which cut its year-end target to $4,900 from an earlier $5,400, was driven by the bank pushing its own expected Fed cuts out to March 2027 and December 2027 -- later than it had assumed when it set the higher target. Central bank buying is still lifting the forecast; it is simply not lifting it as far as it would if rate cuts were also arriving sooner. A World Gold Council survey conducted between February and May adds independent support to the central bank thesis: a record 45% of the 76 central banks it polled said they expect to add to their own gold reserves over the next year, the highest share the annual survey has recorded.

Why it matters

Central bank demand behaves differently from investor demand, and that difference matters for anyone trying to read where gold's floor sits. A hedge fund or an ETF holder can exit a gold position in minutes if sentiment turns; a central bank reallocating its reserves away from dollar exposure is executing a multi-year strategic decision that does not reverse because of one soft US jobs report. If Goldman's tracking is right that this buying is running at five times the pre-2022 pace, it implies a persistent source of demand sitting underneath the market regardless of what short-term traders do -- which is also why the bank kept its central-bank thesis intact even while trimming its price target for a separate, rate-driven reason. For Indian buyers and investors watching MCX gold, the message is less about a single forecast number and more about the source of demand behind it -- structural sovereign buying tends to persist through the kind of short-term volatility that news events like a hawkish Fed speech can trigger.