Goldman Sachs Raises Its Gold Price Forecast to $4,900 per Ounce by the End of 2026

SadaNews Economy - Goldman Sachs has raised its gold price forecast for December 2026 to $4,900 per ounce, up from the previous $4,300, citing strong inflows into gold-backed Western index funds and expectations of continued purchases by central banks.

The bank stated, "We see that the risks to our updated gold price forecast still lean overall toward the upside, as diversification of investment portfolios in the private sector into the relatively small gold market could push the holdings of index funds to levels higher than our estimates based on interest rates."

Gold has risen by 51% since the beginning of this year, supported by strong purchases from central banks, increasing demand for gold-backed index funds, a weak dollar, and rising interest from individual investors looking for a hedge against escalating trade and geopolitical tensions.

Goldman Sachs expects average central bank purchases to reach 80 tons in 2025 and 70 tons in 2026, noting that central banks in emerging markets are likely to continue structurally diversifying their reserves toward gold.

The bank also predicts that holdings of Western index funds will increase, with the likelihood of the U.S. Federal Reserve reducing interest rates by 100 basis points by mid-2026.

Additionally, the bank added, "In contrast, the more volatile speculative positions have remained largely stable. Following the significant increase in September, western index fund holdings are now fully aligned with our estimates based on U.S. interest rates, indicating that the recent strength of index funds is not overblown."