What to know:
- Goldman Sachs expects central banks to increase gold purchases through 2026.
- Strong geopolitical uncertainty continues to support long-term gold demand.
- China extended its gold-buying streak for the 18th consecutive month.
- Goldman still sees gold prices recovering toward year-end targets.
Goldman Sachs expects central banks to increase gold purchases through 2026, strengthening long-term demand and supporting a potential price recovery by year-end. Rising geopolitical tensions and diversification strategies continue to keep gold attractive for official reserves despite inflation concerns and pressure from higher interest rates.
Central Banks Strengthen Gold Demand Outlook
Goldman Sachs expects central banks to increase gold purchases in the coming months, creating stronger support for bullion prices by the end of the year.
The bank said official-sector demand remains firm despite recent market pressure caused by rising inflation and geopolitical tensions. Analysts Lina Thomas and Daan Struyven stated that central-bank purchases could average 60 tons per month throughout 2026.
Their updated estimates also showed that the 12-month moving average for buying activity reached 50 tons in March. Earlier calculations had placed the figure much lower at 29 tons.
The bank revised its framework for measuring gold accumulation after changes in global trade flows reduced the accuracy of previous tracking methods.
Goldman noted that older assumptions based on UK trade data no longer fully reflected current buying patterns among global central banks.
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Gold Remains Key Reserve Asset Globally
The report highlighted growing interest in diversification strategies. Central banks continue to treat gold as a key reserve asset during periods of economic and geopolitical uncertainty. Recent developments in global politics have further strengthened that trend.
Gold prices have struggled since the start of the conflict in the Middle East. Rising energy costs pushed inflation pressures higher across global markets and reduced expectations for interest-rate cuts from central banks.
A change in the way markets valued cash created a fall in the prices of bonds worldwide and sparked another round of pressure on non-interest-bearing investments such as gold.
Investors remained cautious amid efforts that centered more on combating inflation than stimulating the economy.
Goldman Sachs Maintains Bullish Long-Term Gold Outlook
Despite near-term weakness, Goldman Sachs held firm in its optimistic outlook in the long run. It maintained its expectation that gold prices would reach the $5,400 range before the end of the year.
Other prominent firms like UBS Group AG and ANZ Group Holdings Limited have also expressed a positive outlook towards gold. Gold spot prices were hovering at over $4,545 per ounce, having flirted with all-time highs close to $5,600 in January.
The latest report by Goldman Sachs follows the impressive quarterly report released by the World Gold Council. According to the World Gold Council, central banks purchased 244 tons of gold in the first quarter, compared to the 208 tons acquired in the previous quarter.
Nevertheless, China retained its position as one of the top purchasers in the market. The People’s Bank of China purchased another 260,000 troy ounces of gold in April, marking a continuous streak of acquisitions lasting 18 months, mirroring the streak initiated in late 2022.
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