A new gold rush by these investors will push prices past $5,000 this year, says Goldman Sachs

By Jules Rimmer

Goldman Sachs lifts its target price to $5,400 from $4,900

Goldman Sachs again has boosted its gold price forecast - and this time analysts have identified a new source of demand to justify the increased target.

Gold (GC00) has enjoyed a blistering start to 2026, rallying 11% in the first weeks of January and touching all-time highs just short of $4900 Wednesday. Goldman Sachs identified one key upside risk that has been triggered, prompting them to lift their end of year price objective for gold by 17% from $4,900 per ounce to $5,400.

That driver is private sector buying, mostly funneled into the market through exchange-traded funds, and motivated by the twin appeal of diversification and hedging geopolitical risk.

Analysts Daan Struyven and Lina Thomas says these private-sector buyers are now competing for the limited bullion available with those central banks whose immense buying spree over the last three years has in large part been responsible for gold's meteoric rise from around $1,800 in January 2023.

Goldman Sachs has been steadily raising its target for gold in the past year to keep pace with the rally. In February, the same analysts called for $3,100 by the end of 2025, raising that to $3,300 the next month. They've steadily increased their end of 2026 view as well, moving from $4,300 to $4,900 in October.

Goldman, and many other observers, point to the freezing of Russia's central bank reserves as a crucial factor in altering the mindset of other central bankers about how they allocated their own reserves. Before the Russian invasion of Ukraine, central banks were averaging around 17 metric tons of gold per annum in purchases but now it's stepped up to something more like 60 tons.

Western ETF holdings have increased by roughly 500 tons in the last twelve months, much of that motivated by what's widely interpreted as the debasement theme.

The report emphasizes that central banks will be the primary locomotive for the expected appreciation, contributing 14 out of the 17 percentage points increase. That private-sector demand adds the remaining three percentage points.

Goldman Sachs believe the bulk of the move in gold will be driven by central bank purchases, augmented by private sector additions.

The private sector is being pulled into the rally by the 50 basis points of Fed rate cuts anticipated in 2026 and the urge to hedge macro policy risks, like geopolitical uncertainty and fiscal sustainability.

Struyven and Thomas estimate that central banks will accumulate a further 60 tons of gold in 2026 with those in emerging markets leading this structural shift in reserve allocation.

Goldman Sachs now has one of the higher gold price forecasts on the street but among the major Wall Street investment banks, Bank of America's Michael Hartnett's call for $6000 by spring 2026 was the most punchy.

-Jules Rimmer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

01-22-26 0656ET