Goldman Sachs remains bullish on gold: Target price expected to reach $4900 by 2026.

Goldman Sachs said on Wednesday that it believes there is significant upside potential for the gold price forecast of $4,900 per ounce by the end of 2026. "In recent times, some investors have been calling for an increase in gold allocations," the bank's analysts said. They pointed out that current gold holdings are at low levels, and the trend towards asset diversification may be shifting, factors that will collectively enhance the attractiveness of gold as a precious metal investment. This view coincides with recent comments from Goldman Sachs' head of Oil Research, Dan Struyven. On November 26, Struyven noted that even a slight increase in retail investors' holdings and participation in diversified asset allocation could significantly increase the upside potential for their $4,900 per ounce gold price forecast. "We forecast nearly 20% upside potential in gold price by the end of 2026, with a target price of $4,900 per ounce," he analyzed, "while this increase may not replicate the rapid pace seen this year - with gold prices already climbing nearly 60% year-to-date - we believe that the two key factors driving gold prices higher in 2025 will continue to play a role in 2026." The first driving factor is the structural increase in central bank gold purchases. "Since the freezing of Russia's central bank reserves in 2022, (emerging market) reserve managers have received a major alert that they need to diversify reserves into gold, as once gold is stored in the country's treasury, it is the only truly secure asset." The second core driving factor comes from the Fed's rate-cutting cycle. Struyven analyzed, "As non-interest-bearing assets like gold become more attractive in a rate-cutting environment, funds will accelerate into the gold ETF market." He further stated, "Our economic model predicts that the Fed will cut rates by a cumulative 75 basis points in the future." "We have support from central bank gold purchases and also from private investors." Following central bank gold purchases, the next DRIVE for gold may come from diversification in the private sector When asked how the recent strength of the dollar might affect his gold forecast (especially considering that the devaluation trade is a key variable in the current analytical framework), Struyven responded in detail. He stated, "The core drivers of current gold demand still focus on central bank diversification, but the reach of this trend is expected to expand further. If private sector investors enter the market at an accelerated pace, it will resonate with our existing bullish gold forecast, opening up greater room for price increases." Struyven explained, "I believe the key intuition for a significant rise in gold prices due to private sector diversification lies in the relatively small size of the gold market. If we look at global gold ETFs, their size is equivalent to only about 1/70th of the US Treasury market, so even a relatively small diversification step from the global bond market is enough to significantly push up the gold price." Struyven stated that this is also another reason why Goldman Sachs currently lists gold as the preferred long commodity. "Under the benchmark scenario, you have significant upside potential; and in scenarios where market performance may be poor - such as concerns about fiscal trajectory, or doubts about the Fed's independence - I believe gold's performance will be even better than in the already attractive benchmark scenario." On October 6, Goldman Sachs raised its 2026 gold price forecast from $4,300 per ounce to $4,900 per ounce, citing additional gains driven by strong inflows of Western ETF funds and continued central bank gold purchases. Goldman analysts wrote, "We believe that the risks facing the revised gold price forecast are generally biased to the upside, as private sector diversification into the relatively small gold market could make ETF holdings higher than our estimates based on interest rate expectations." They stated that with the Fed expected to cut federal funds rates by 100 basis points by the second quarter of 2026, Western ETF holdings are expected to rise. Goldman also expects central bank gold purchases to average 80 tons in 2025 and 70 tons in 2026, stating that emerging market central banks may continue to diversify reserves from the dollar to gold. Against the backdrop of strong purchases by major central banks, increasing demand for gold ETFs, a weakening dollar, and a growing interest among retail investors in hedging against trade and geopolitical tensions, the spot gold price has risen nearly 60% year-to-date. Analysts said, "In contrast, speculative positions, which are more noisy, have generally remained stable. After a significant increase in September, Western ETF holdings are now at levels fully in line with our estimates based on US interest rates, indicating that recent ETF strength is not overly inflated."