Continue to be optimistic about gold prices “reaching $4,000 by the middle of next year”! Goldman Sachs predicts: central banks will continue “buying gold” for three years.

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Goldman Sachs is once again bullish on gold.

Recently, Goldman Sachs' precious metals team led by Lina Thomas maintained a target price forecast of $4,000 per ounce by mid-2026, believing that structurally stronger central bank gold purchases and inflows into ETFs will continue to drive gold prices higher.

Since August 26, gold prices have risen 6%, breaking out of the months-long consolidation range between $3,200 and $3,450, and are now trading near $3,650. Lina Thomas pointed out that this round of increase has been mainly driven by an increase in ETF holdings, stronger speculative positions, and expectations that central bank demand will accelerate again after the summer lull.

The bank expects central bank gold purchases to continue for three years, mainly because gold allocations by emerging market central banks are still significantly lower than those in developed markets.

Gold Price Breaks Out, Three Major Buyers Enter

According to Goldman Sachs’ analysis, the recent gold surge is mainly due to three big buyers entering the market.

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

In July of this year, global central banks and institutions' gold demand in the London OTC market was 48 tons, below Goldman’s forecast of a monthly average of 80 tons for 2025. This matches the seasonal trend: central bank purchases usually slow down in the summer and pick up again starting in September.

On this basis, Goldman Sachs maintains its forecast for the gold price to reach $4,000 per ounce by mid-2026. The report believes that expectations of a dovish Fed and a 30% risk of U.S. recession over the next 12 months will jointly support inflows into ETFs.

However, it should be noted that increased speculative long positions recently also bring tactical correction risk, as such positions tend to revert to the mean.

Central Bank Gold Purchases Will Continue for Three Years

Goldman Sachs considers the nearly fivefold increase in the rate of global central bank gold purchases since 2022 as a "structural shift," and expects this trend to last for another three years. The logic behind this is that emerging market central banks are actively diversifying reserve assets, and their gold reserves are still far inferior to developed markets.

The report cites China as an example: as one of the largest gold buyers, China’s official gold reserves account for about 8% of its total reserves, much lower than the approximately 70% levels of the U.S. and Germany, and also below the global average of about 20%. Goldman’s analysis shows that if China targets 20% in the medium term and maintains the recent purchase rate of about 40 tons per month, it would take about three years to reach this goal.

For example, between 2014 and 2020, Russia increased the proportion of its gold reserves from 8% to 20%.

This view is also supported by the latest World Gold Council (WGC) survey: 95% of central banks surveyed expect global gold holdings to increase over the next 12 months—up from 81% in 2024—and none expect a decrease. 43% of central banks plan to increase their own gold holdings, the highest proportion since the surveys began in 2018, up significantly from 29% in 2024, with none planning to decrease holdings.

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