(Kitco News) – Gold prices will reach $4,900 per ounce next year on sustained demand from central banks and ETF buyers, but even a small push into diversification from retail investors could deliver significantly more upside, according to Daan Struyven, head of oil research at Goldman Sachs.
In an interview with Bloomberg TV on Wednesday morning, Struyven said the investment bank is as bullish as ever on the yellow metal.
“We look for nearly 20% of additional price upside by the end of 2026, with our forecast at $4,900 per troy ounce by the end of ’26,” he said. “Not as fast as this year – we were up almost 60% year-to-date – but the two drivers of the ‘25 rally, we think, will be repeated in ‘26.”
The first driver is structurally higher central bank purchases. “Since the freezing of Russia's central bank reserves in 2022, [emerging market] reserve managers got this big wakeup call that they need to diversify into gold, which is the only truly safe asset once you hold it in your domestic vaults.”
The second key driver is the Federal Reserve’s rate cutting cycle. “Fed cuts, because gold as a non-yielding asset tends to attract inflows into the gold ETF market,” Struyven said. “Our economists forecast that you’ll see 75 basis points more of Fed cuts.
“We get support both from central bank buying, and from private investors.”
Struyven was asked how the U.S. dollar’s resilience in recent weeks impacts their gold forecast, given that the debasement trade was a factor in the calculation.
“I would think of a potential broadening of the diversification theme, which currently is quite restricted to central banks,” he replied. “But if that were to broaden to private sector investors, it would cause further upside to our already bullish gold price forecast.”
“I think the key intuition for the size of this price upside from private sector diversification is that the gold market is relatively small,” Struyven explained. “If you look at global gold ETFs, they're about 70 times smaller than the value of the U.S. Treasury market, so you only need a relatively small diversification step out of, for instance, the global bond markets, to cause significant upside to the gold price.”
Struyven said this is another reason why gold is currently Goldman Sachs’ number one long commodity recommendation.
“You have significant upside in a base case, and in scenarios where markets may perform less well – perhaps concerns about the fiscal trajectory or concerns about questions about Fed independence – I think gold would be even better than in the already attractive base case.”
On Oct. 6, Goldman Sachs raised its 2026 gold price forecast from $4,300 to $4,900 per ounce, saying the added gains will be driven by strong Western ETF inflows and sustained central bank buying.
“We see the risks to our upgraded gold price forecast as still skewed to the upside on net, because private sector diversification into the relatively small gold market may boost ETF holdings above our rates-implied estimate,” Goldman analysts wrote. The bank expects Western ETF holdings to rise as the Federal Reserve lowers the funds rate by 100 basis points by Q2 2026, they said.
Goldman also projects central bank buying will average 80 tonnes in 2025 and 70 tonnes in 2026, and said emerging market central banks are likely to continue to diversify their reserves away from the U.S. dollar and into gold.
Spot gold is up nearly 60% year-to-date on the back of strong central bank buying, increased demand for gold-backed ETFs, a weaker dollar, and growing interest from retail investors looking to hedge against trade and geopolitical tensions.
“In contrast, noisier speculative positioning has remained broadly stable. Following the large September increase, the level of Western ETF holdings has now fully caught up with our U.S. rates-implied estimate, suggesting the recent ETF strength is not an overshoot,” the analysts said.
