Goldman Keeps Bullish Gold Target Despite Headwinds

Key Moments

Goldman Sachs Sees Long-Term Upside Driven by Central Banks

Analysts at Goldman Sachs continue to project a substantial rise in Gold prices, reiterating a year-end target of $5,400 per troy ounce. They expect central banks to ramp up their Gold purchases in 2026, creating additional support for the metal toward the end of the year.

In a note dated May 15, cited by Bloomberg, analysts Lina Thomas and Daan Struyven indicated that central bank buying is expected to average 60 tonnes per month this year. That compares with a 12-month moving average of 50 tonnes as of March, underscoring an anticipated acceleration in official sector demand.

Central bank demand has been a key pillar for Gold, which reached an all-time high of around $5,600 per troy ounce at the end of January. The analysts, referencing an in-house survey, said: “There’s a strong underlying interest in Gold, and recent geopolitical developments are likely to reinforce diversification.”

Current Market Levels vs. Goldman Sachs Target

Despite its earlier record, Gold is currently trading around $4,500 per troy ounce. The metal has come under pressure from sharply higher global bond yields as inflation expectations have risen, weighing on investor appetite for non-yielding assets.

Even so, Goldman Sachs is maintaining its constructive stance, with its $5,400 year-end target sitting just shy of the previous peak.

According to the article, Gold has been broadly consolidating following a sharp sell-off in March.

Short-Term Risks: Liquidity Needs and Higher Yields

While the longer-term outlook remains positive, Goldman Sachs is more guarded on the near-term path for prices. The analysts described Gold as “a natural source of cash if private investors face liquidity needs — for example, if equity markets sell off amid higher rates and weaker growth expectations.”

This dynamic suggests that periods of market stress and tighter financial conditions could still trigger selling from private investors, even as central banks continue to accumulate reserves.

Central Bank Buying Trends and China’s Role

Recent data from the World Gold Council (WGC) points to a pickup in central bank activity. The People’s Bank of China (PBoC) purchased 8 tonnes of Gold in April, the highest monthly addition since December 2024, according to the WGC. Gold now accounts for about 9% of China’s total foreign exchange reserves.

On a global basis, central banks bought 244 tonnes of Gold in the first quarter, a 3% increase compared with the same period a year earlier. This occurred even as some countries increased their sales during the quarter.

The WGC summarized its outlook by stating: “Our view remains that investment and central bank demand will be supported by ongoing geopolitical risk, with further investment impetus from elevated inflation and persistent high gold prices.”

Gold as a Safe Haven: Key Characteristics and Market Role

Gold has historically been used as both a store of value and a medium of exchange. Beyond its appeal in jewelry, it is widely regarded as a safe-haven asset, often favored during periods of market turmoil. Investors also frequently view Gold as a hedge against inflation and currency depreciation, as it is not tied to any specific issuer or government.

Who Holds the Most Gold?

Central banks are the largest holders of Gold globally. To bolster confidence in their currencies during volatile periods, they often diversify reserves by adding Gold, which can enhance perceptions of economic and fiscal strength. High Gold holdings can serve as a signal of a country’s solvency.

According to World Gold Council data, central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, the highest annual purchase since records began. Emerging market central banks, including those in China, India and Turkey, have been increasing their Gold reserves at a rapid pace.

Correlations With Other Assets

Gold typically shows an inverse relationship with the US Dollar and US Treasuries, both of which are major reserve and safe-haven instruments. When the Dollar weakens, Gold tends to rise as investors and central banks shift allocations in search of diversification during uncertain periods.

The metal also generally moves in the opposite direction of risk assets. Strong rallies in equity markets often undermine demand for Gold, while sell-offs in riskier segments tend to support its price.

What Drives the Gold Price?

A range of factors can influence Gold’s price trajectory. Geopolitical tensions or heightened fears of a severe economic downturn can rapidly drive demand higher due to Gold’s safe-haven profile.

Interest rates are another important driver. As a yield-less asset, Gold often benefits when interest rates fall, while rising borrowing costs can create headwinds. Much of the day-to-day movement, however, is closely linked to the behavior of the US Dollar (USD), since Gold is priced in dollars (XAU/USD). A strong Dollar tends to restrain Gold, whereas a weaker Dollar typically supports higher prices.