Following Goldman Sachs’ most recent estimate, which shows a significant chance that the price of gold will reach $4,900 per ounce by 2026, the gold price is heating up once more. According to Daan Struyven, Head of Oil Research at Goldman Sachs, a potent mix of ETF inflows and central bank demand will drive the gold boom into a new stage.
This year alone, the gold price has surged by nearly 60%. This increase is not just seasonal but part of a global shift towards safer and more stable assets amid ongoing economic uncertainty.
Why Is Goldman Sachs Growing More Bullish?
Struyven explains that the projected rise in gold price is grounded in two structural reasons that make gold increasingly attractive.
The first reason is that after the freezing of Russian reserves in 2022, many developing countries felt the need to reduce their dependence on the US dollar. The result was a wave of gold purchases by central banks that continues to this day. Gold is considered the safest asset because it can be stored physically domestically and is free from geopolitical risk.
Goldman Sachs expects central bank buying to remain strong, averaging 80 tonnes in 2025 and 70 tonnes in 2026. Such sizable purchases form a major pillar supporting the rising gold price and create long-term demand that is difficult to replace with other assets.
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Struyven also highlights that monetary policy will greatly influence gold’s prospects. When the Fed lowers interest rates, expected to cut by around 75 basis points more, investors tend to move funds into safe-haven assets like gold, which do not yield interest. Rate cuts generally weaken the dollar, making gold more attractive globally.
The combination of these two drivers gives Goldman Sachs confidence that the gold price rally will continue into 2026.
Private Sector Diversification Could Be a Key Additional Factor
The possibility of more private investor participation is an intriguing finding from Struyven’s investigation. Central banks and exchange-trade funds (ETFs) have thus far dominated the demand for gold, but institutional and ordinary investors have just lately begun to make significant market inroads.
However, there is vast room for growth in this sector. Struyven points out that the global gold market is relatively small. The total value of global gold ETFs is said to be 70 times smaller than the U.S. Treasury market. This means even a small portfolio diversification move by retail or institutional investors could accelerate the rise in the gold price beyond current estimates.
If this diversification theme expands further into the private sector, Goldman Sachs’ bullish forecast could even prove conservative. In a market clouded by fiscal uncertainty, geopolitical risks, and questions over central bank independence, gold stands out as a highly attractive safe haven.
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This Year’s Gains Lay a Strong Foundation for the Next Rally
The gold price has climbed nearly 60% this year, setting a solid foundation for further gains. This surge has been driven by:
- Strong central bank purchases
- Increased demand for gold ETFs
- A weakening U.S. dollar
- Rising interest from retail investors seeking protection against global economic risks
Notably, according to Goldman analysts, speculative activity has remained relatively stable, indicating that this year’s gains are supported by genuine demand rather than short-term volatility. This strengthens the case for a sustained upward trajectory in the gold price.
In their latest report, Goldman Sachs emphasizes that the risks to their price forecast still skew to the upside. This is due to potential private sector inflows pushing ETF holdings beyond their rate-based estimates.
Gold continues to demonstrate its value as a solid and dependable protective asset as long as there is uncertainty in the world. The next two years provide investors a smart chance to fortify portfolios and skilfully handle market turbulence.
