Goldman Sachs said gold prices could climb to $5,400 per troy ounce by the end of 2026, backed by steady central bank buying and expected rate cuts in the United States. The brokerage, however, noted that short-term risks remained tilted lower due to potential liquidation pressures and market volatility, even as its longer-term view stayed constructive.
The report, titled “Precious Comment Structurally Bullish Gold, Tactically Cautious”, laid out a mix of supportive structural trends and near-term uncertainties shaping bullion prices over the next 12 to 18 months.
Gold run amid a rate cut
Goldman Sachs said its base case for gold reaching $5,400 per troy ounce by the end of 2026 rested on three factors, including central bank diversification, positioning in futures markets, and expected easing by the Federal Reserve.
The brokerage expects the Federal Reserve to deliver 50 basis points of rate cuts, which typically supports non-yielding assets such as gold. It also assumed no large-scale liquidation from private investors during this period.
“We continue to forecast gold prices reaching $5,400 per troy ounce by the end of 2026, as central bank diversification continues and the Fed delivers the 50bp of cuts our economists expect,” Goldman Sachs said.
The report added that speculative positioning in gold markets remained relatively low, which left room for fresh buying interest to build over time.
Central banks are expected to remain key buyers
Goldman Sachs data showed that central banks were likely to remain the backbone of demand. The brokerage estimated that central bank gold purchases could average 60 tonnes per month in 2026.
Survey findings from a Goldman Sachs central bank conference pointed in the same direction. Around 70% of respondents expected global gold reserves to increase over the next 12 months, while about 25% expected holdings to stay unchanged.
A separate survey result cited by Goldman Sachs indicated that nearly 70% of central banks expected gold prices to stay above $5,000 per troy ounce over the next year.
“Around 70% of central banks surveyed expect global gold reserves to rise” Goldman Sachs said.
The firm noted that this steady accumulation trend reflected ongoing diversification away from traditional reserve assets.
Positioning in gold markets leaves room for upside
Goldman Sachs pointed to futures market data to argue that investor positioning was not stretched. This relatively moderate positioning suggested that gold had not yet seen excessive speculative inflows, which could otherwise limit further gains.
The report indicated that past rallies often coincided with higher positioning levels, implying that current levels could still support additional buying.
Near term risks tied to liquidation and market volatility
While the longer term view remained positive, Goldman Sachs cautioned that the near-term outlook carried downside risks. The brokerage said gold could face pressure if broader markets corrected or if geopolitical disruptions persisted.
The report specifically pointed to the possibility of liquidation if disruptions in the Strait of Hormuz continued or if equity and bond markets declined further.
“We view near term risks to our gold price forecast as skewed to the downside, as gold remains vulnerable to further liquidation” Goldman Sachs said.
The firm also noted that much of the earlier positioning and options overhang had already been cleared, which reduced some of the immediate pressure but did not eliminate risk.
Geopolitics could push prices higher over time
Goldman Sachs said the medium-term picture could improve further if geopolitical tensions encouraged more countries to diversify reserves into gold.
The report cited developments involving Iran and other regions such as Greenland and Venezuela as potential triggers for stronger demand.
“Over the medium term, risks are skewed to the upside if geopolitical developments were to accelerate diversification into gold” Goldman Sachs said.
The brokerage added that concerns around fiscal sustainability in Western economies could also play a role in pushing demand higher.
London remained the top storage choice
The report also touched on storage preferences. According to survey responses shown on page 3, the Bank of England in London remained the most preferred location for storing gold reserves, followed by domestic storage options.
This mix of international and domestic storage pointed to a balance between accessibility and security among central banks.
What Goldman Sachs assumptions did not include
Goldman Sachs clarified that its base case did not factor in additional private sector diversification into gold beyond the expected boost from rate cuts. It also assumed no further liquidation by private investors.
These assumptions meant that any unexpected surge in private demand or any large scale selling could alter the price trajectory from its forecast.
Conclusion
Goldman Sachs maintained a firm long term call on gold, with a target of $5,400 per troy ounce by end 2026, driven largely by central bank demand and expected rate cuts. At the same time, the brokerage pointed to short term risks linked to market volatility and possible liquidation pressures.
The report presented a market where structural demand stayed intact, while near term movements depended on global events, investor positioning and macroeconomic signals.
Disclaimer: The information provided is based on market analysis and price targets from Goldman Sachs and does not constitute a buy, sell, or hold recommendation. Gold investments are subject to market volatility, currency fluctuations, and macroeconomic shifts; past performance is not indicative of future returns. Readers are advised to consult a SEBI-registered investment advisor before making any financial decisions based on these forecasts.
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