Continue to be optimistic about gold prices "reaching $4,000 by mid-next year"! Goldman Sachs predicts: Central banks' "gold purchases" will continue for three years

Goldman Sachs is bullish on gold once again.

Recently, the precious metals team led by Goldman Sachs' Lina Thomas maintained its mid-2026 target price forecast of $4,000 per ounce, believing that the structural increase in central bank gold purchases and ETF inflows will continue to drive gold prices higher.

Gold prices have risen 6% since August 26, breaking through the consolidation range of $3,200 to $3,450 that lasted for several months, and are currently trading around $3,650. Lina Thomas pointed out that this round of increase is mainly driven by the increase in ETF holdings, enhanced speculative positions, and market expectations of a re-acceleration in central bank demand after the summer lull.

The bank expects central bank gold purchases to continue for three years, primarily driven by the fact that the gold allocation ratio of emerging market central banks is still significantly lower than that of developed markets.

Gold Prices Break Consolidation, Three Major Buyers Enter the Market

According to Goldman Sachs' analysis, the recent surge in gold prices is backed by three major buyers entering the market.

1. Increased ETF holdings (contributing about 1.5 percentage points to the recent 6% increase);
2. Enhanced speculative positions (contributing about 1.2 percentage points);
3. Potential re-acceleration of central bank demand after the summer off-season.

In July of this year, global central banks and institutions had a gold demand of 48 tons in the London over-the-counter market, lower than Goldman Sachs' forecast of an average of 80 tons per month in 2025. This aligns with seasonal patterns: central bank purchases typically slow down in the summer and begin to re-accelerate from September.

Based on this, Goldman Sachs maintains its forecast of gold prices reaching $4,000 per ounce by mid-2026. The report believes that expectations of the Federal Reserve's easing policy and a 30% recession risk in the U.S. over the next 12 months will jointly support ETF inflows.

However, it is important to note that the recent increase in speculative long positions also brings the risk of tactical pullbacks, as such positions often exhibit mean-reversion characteristics.

Central Bank Gold Purchases Will Last for Three Years

Goldman Sachs views the nearly fivefold increase in global central bank gold purchases since 2022 as a "structural shift" and expects this trend to continue for another three years. The underlying logic is that emerging market central banks are actively promoting the diversification of reserve assets, while their gold reserve ratios are still far below those of developed markets.

The report cites China as an example, noting that as one of the largest gold buyers, China's official gold reserves account for about 8% of its total reserves, far below the approximately 70% level of the U.S. and Germany, and also below the global average of about 20%. Goldman Sachs analyzes that if China aims for a 20% mid-term target and maintains a recent monthly purchase rate of about 40 tons, it would take approximately three years to achieve this.

For instance, Russia increased its gold reserve share from 8% to 20% between 2014 and 2020 This view is also supported by the latest survey from the World Gold Council (WGC): 95% of the surveyed central banks expect global gold holdings to increase in the next 12 months, up from 81% in 2024, with no central bank expecting a decrease. 43% of central banks plan to increase their own gold holdings, the highest proportion since the survey began in 2018, significantly up from 29% in 2024, and no central bank plans to reduce their holdings.

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