Why Goldman Sachs raised its gold price forecast 10%

• Goldman hikes its gold forecast 10%, targeting $5,400 an ounce by year-end.
• Private investors are piling into gold, from ETFs to physical bars and options.
• Central banks and private buyers are now competing for limited bullion.

Goldman Sachs has hiked its gold price forecast by 10% on the back of blistering private-sector demand for the precious metal.

Analysts at the Wall Street giant now expect gold prices to reach $5,400 per troy ounce by the end of the year, up from $4,900 per ounce in their previous forecast, as private sector diversification into gold has started to play out.

"The rally has accelerated since 2025 because central banks started competing for limited bullion with private sector investors," wrote analysts Daan Struyven and Lina Thomas in a Thursday note.

That acceleration followed a period of strong official-sector buying, during which central bank purchases underpinned robust gold price gains in 2023 and 2024.

Spot gold was trading around $4,800 per ounce on Thursday. Prices pulled back from a record high of around $4,888 per ounce amid easing US-Europe tensions over Greenland.

The price of the yellow metal has risen 11% so far this year and more than doubled since the start of 2023, when it traded around $1,865 per ounce.

Demand for gold has strengthened across the private sector.

Goldman's analysts wrote that the dash for gold has taken place through traditional ETF purchases, as well as a growing range of investment instruments designed to hedge global macro policy risks. They also pointed to high-net-worth families snapping up physical gold and investors buying call options.

High gold prices will not cure high prices

Goldman's upgraded price forecast reflects support from potential Federal Reserve interest rate cuts, as well as central banks buying an average of 60 metric tons per month in 2026 as emerging markets diversify their asset holdings into the yellow metal.

The analysts said they assume demand for hedges against global macro policy risks will remain steady. They wrote that risks — such as concerns over government debt and long-term budget pressures — are unlikely to be fully resolved in 2026, keeping elevated gold prices on a durable footing.

"In commodities, the usual maxim that 'high prices cure high prices' does not apply to gold," wrote Goldman's analysts.

This is because gold supply doesn't change much when prices rise or fall.

Most gold already exists and just gets traded between owners, while new mining adds only a tiny amount each year — about 1% of the total gold in the world. Output is steady and cannot quickly increase, even when prices jump, the analysts wrote.

As a result, gold prices typically stop rising only when demand weakens: when geopolitical tensions calm down and central banks feel less need to diversify, when economic and policy risks ease and private investors pull back, or when the Federal Reserve shifts from cutting interest rates to raising them.