Goldman Sachs targets $5,400 gold by year-end, citing central bank buying and Fed cuts, while warning of higher volatility.
Summary:
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Goldman Sachs forecasts gold at $5,400 by end-2026
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Central bank buying a key structural driver
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Fed rate cuts expected to spur investor allocations
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Additional private diversification flows pose upside risk
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Greater volatility likely as options activity rises
Gold prices are set for further gains in 2026, according to a new note from Goldman Sachs, which sees bullion climbing to $5,400 by year-end.
Lina Thomas, senior commodities analyst at Goldman Sachs Research, attributes the constructive outlook to two primary forces: sustained central bank purchases and rising investor allocations as U.S. interest rates fall.
Official sector buying remains a cornerstone of the bullish thesis. Central banks continue to diversify foreign-exchange reserves away from traditional assets and into bullion, providing steady structural demand. That trend, Thomas argues, should remain intact through 2026.
The second pillar is monetary policy. Goldman expects the Federal Reserve to deliver rate cuts this year, lowering the opportunity cost of holding non-yielding assets such as gold. Historically, declining real yields and easing financial conditions have supported investor flows into precious metals.
Thomas also highlights what she describes as “significant upside” risk to the $5,400 forecast. The bank’s base case does not fully incorporate the potential for further private-sector diversification into gold. Given the relatively small size of the gold market compared with global bond and equity markets, even modest reallocation flows could have an outsized price impact.
However, that dynamic cuts both ways. Much of the diversification demand is expressed via call options, which can amplify price swings. As a result, while Goldman expects the broader uptrend to persist, it cautions that volatility is likely to increase.
In short, the bank sees gold’s rally extending into year-end—driven by structural reserve diversification and cyclical rate relief—but with sharper price action along the way.
This article was written by Eamonn Sheridan at investinglive.com.
