Goldman Sachs announced a significant increase in its December 2026 gold price forecast, raising it to $4,900 per ounce from $4,300.
The investment bank attributed this revised outlook to robust Western exchange-traded fund (ETF) inflows and anticipated strong central bank buying.
“We see the risks to our upgraded gold price forecast as still skewed to the upside on net, because private sector diversification into the relatively small gold market may boost ETF holdings above our rates-implied estimate,” Goldman was quoted in a Reuters report.
COMEX gold hits $4,000
On Tuesday, spot gold reached a new peak of $3,977.19 an ounce before trading around $3,960 per ounce as of 0130 GMT.
On COMEX, the December gold contract breached the $4,000 per ounce mark for the first time ever earlier in the session.
Gold has experienced a remarkable surge of 51% this year, driven by a confluence of powerful market forces.
A significant factor has been the robust demand from central banks, which have been consistently adding gold to their reserves, viewing it as a reliable store of value and a hedge against economic instability.
This institutional buying spree underscores a global shift towards diversifying away from traditional fiat currencies.
Increase in ETF demand and weaker dollar
Complementing this, there has been a notable increase in the demand for gold-backed Exchange Traded Funds (ETFs).
These financial instruments allow investors to gain exposure to gold without directly owning the physical metal, offering liquidity and convenience.
The heightened interest in gold ETFs reflects a broader investor sentiment seeking safe-haven assets amidst market volatility.
Furthermore, a weaker US dollar has played a crucial role in making gold more attractive.
As the dollar depreciates, gold, which is priced in dollars, becomes cheaper for investors holding other currencies, thereby boosting demand.
This inverse relationship between the dollar and gold is a long-standing market dynamic that has significantly influenced gold’s recent performance.
Finally, the growing interest from retail investors cannot be overstated.
Individual investors are increasingly turning to gold as a hedge against rising trade tensions and geopolitical uncertainties.
In an environment marked by unpredictable global events and inflationary pressures, gold is perceived as a reliable protector of wealth, providing a sense of security and stability to portfolios.
Central bank purchases
Goldman Sachs projects that central banks will purchase an average of 80 metric tons of gold in 2025 and 70 metric tons in 2026.
This forecast is based on the expectation that emerging market central banks will continue to diversify their reserves by investing in gold.
Analysts at Goldman Sachs anticipate a rise in Western ETF holdings. This projection is based on the expectation that the US Federal Reserve will reduce the funds rate by 100 basis points by mid-2026.
The bank said:
In contrast, noisier speculative positioning has remained broadly stable. Following the large September increase, the level of Western ETF holdings has now fully caught up with our U.S. rates-implied estimate, suggesting the recent ETF strength is not an overshoot.
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