Goldman Sachs continues to project that gold could reach $5,400 per troy ounce by the end of 2026, citing expected Federal Reserve interest-rate cuts, a normalization in speculative positioning, and ongoing central bank demand for bullion.
The bank’s analysts Lina Thomas and Daan Struyven are maintaining that target even though gold has fallen roughly 15% to about $4,580 since the start of the Middle East conflict. They say the decline reflects several factors, particularly the nature of the geopolitical shock and its impact on markets.
Energy supply disruptions linked to the war have intensified inflation concerns, prompting markets to price out Federal Reserve rate cuts for the year. Under those conditions, Goldman estimates gold’s fair value at around $4,550 per ounce, assuming the macro policy hedges that existed before the conflict remain in place.
Another factor behind the drop has been earlier record demand for gold call options, which left the market vulnerable. As the bank noted previously, that positioning meant even a modest equity market correction could trigger a disproportionate decline in gold, with $4,700 identified as a likely floor for such a move.
With the recent selloff largely complete, speculative positioning on Comex has retreated to the 39th percentile, and much of the call-option overhang has been cleared. Analysts say this leaves the market in a “cleaner” structure and at a “more attractive entry point.”
Thomas and Struyven also pushed back against the idea that gold has failed as a safe-haven asset. According to them, gold reacts differently depending on the nature of inflation shocks. Supply-driven inflation—like the current episode—tends to favor commodities broadly, while gold performs better when inflation concerns stem from doubts about central banks’ credibility.
“Like in 2022, gold typically underperforms initially in supply disruption episodes,” the analysts wrote. “Supply driven inflation raises the risk of tighter monetary policy, higher yields increase the opportunity cost of holding gold and weigh on ETF demand, and equity market drawdowns trigger margin related liquidations.”
On the question of central-bank selling, the analysts dismissed fears that Gulf states might follow Turkey—which reportedly sold about 52 tonnes—in reducing their reserves. Gulf economies hold much smaller gold allocations and typically manage their currencies through dollar pegs, making sales of U.S. Treasuries more likely than gold disposals.
Looking ahead, Goldman’s baseline forecast is built on three drivers:
- A normalization of speculative positioning, which could add roughly $195 per ounce.
- 50 basis points of Federal Reserve rate cuts, expected to contribute about $120.
- A rebound in central bank buying to around 60 tonnes per month, potentially adding $535.
However, risks remain on both sides. A prolonged disruption to the Strait of Hormuz combined with further equity market weakness could drive gold down to $3,800 in a severe liquidation scenario. Conversely, heightened geopolitical tensions—such as developments in Greenland or Venezuela—could accelerate diversification away from Western assets and lift prices toward $5,700 or even $6,100.
“Gold allocations in Western private portfolios remain very low,” the team observed, noting that ETF holdings account for only about 0.2% of U.S. private-sector portfolios, suggesting significant room for demand to increase if investor sentiment shifts.