Since April, the driving funds behind gold have changed

Since April, the once rapidly advancing gold market has seen a subtle shift in its price-driving logic. The previously speculation-driven rally has cooled, replaced by more structural and sticky long-term capital represented by central banks, which provides a more solid support foundation for gold prices.

According to news from the Chase Wind Trading Desk, Goldman Sachs stated in a research report on the 13th that gold prices have consolidated in the range of approximately $3,200 to $3,450 per ounce since April, but the underlying capital composition has changed dramatically. The speculative positions that were once at historical highs have been significantly liquidated following the margin calls on April 1st. Currently, the net long positions of managed funds have returned to long-term average levels.

This change is significant for the market. The retreat of speculative capital means that the risk of a sharp decline in gold prices due to forced liquidations has decreased. At the same time, this creates space for more stable long-term capital to enter the market, especially with the potential inflow of exchange-traded funds (ETFs) and the ongoing gold purchasing demand from central banks, which is gradually becoming the core force supporting gold prices.

In the latter half of last week, influenced by news of renewed trade tensions, gold prices rose, closing at $3,355 per ounce on Friday, further confirming its role as a defensive hedge and safe-haven asset. Goldman Sachs predicts that by the end of 2025, gold prices will rise to $3,700 per ounce, and reach $4,000 per ounce by mid-2026.

Speculative Frenzy Retreats, Market Foundation More Stable

The gold market is undergoing a significant "hand-off." The report points out that the speculative positions that once pushed gold prices to high levels since 2024 have significantly decreased after April. The speculative positions that were previously in the top 10% historically have been unwound, marking the decline of short-term speculative fervor.

Goldman Sachs stated that while speculative capital is retreating, the gold purchasing demand from global central banks has shown strong resilience, becoming the "ballast" stabilizing the market. Goldman Sachs' real-time forecasting model indicates that in May, central banks and other institutions had a net purchase of approximately 31 tons of gold in the London over-the-counter (OTC) market, significantly higher than the monthly average of 17 tons before 2022.

So far this year, the model predicts an average monthly demand from central banks of 77 tons. Although this figure is slightly lower than Goldman Sachs' forecast of an average of 80 tons per month until mid-2026, it still demonstrates the structural strength of central bank gold purchasing demand. This sustained buying behavior led by official institutions provides strong fundamental support for gold prices.

Geopolitical Risks Renewed, Gold's Safe-Haven Value Reconfirmed

Gold's safe-haven attributes have been reaffirmed amid recent market volatility. The report analyzes that the rebound in gold prices in the latter half of last week likely reflects market concerns over a new round of trade tensions. As macro uncertainties rise, gold's appeal as a traditional safe-haven asset is once again highlighted Based on the structural changes driven by the above factors, Goldman Sachs maintains its long-term bullish outlook on gold. The report reiterates that strong structural buying from central banks will be the core driver pushing gold prices higher, expecting gold prices to rise to $3,700 per ounce by the end of 2025, reaching $4,000 per ounce by mid-2026, and continues to recommend that investors adopt a long position in gold.