Goldman Sachs has kept gold at the top of its long-term commodity picks, saying the metal’s rally still has room to run as demand from investors and central banks strengthens. The investment bank expects gold to touch $4,300 per ounce by December 2026, supported by what it calls a “structural shift” in buying patterns. The forecast is part of the latest Precious Comment note from Goldman Sachs Commodities Research, which describes gold as its “highest-conviction long commodity”. The bank said the metal has risen nearly 47 per cent this year, breaking past its earlier trading band of $3,200-3,450 per ounce to trade around $3,937 at the time of writing. In India, prices are close to Rs 1.22 lakh per 10 grams.
Breakout backed by real demand
The breakout from gold’s earlier range reflects strong buying from three groups – Western exchange-traded funds (ETFs), central banks and speculative investors. Prices have climbed about 14 per cent since late August, but the bank said much of the move stems from longer-term positioning, not short-term trades.
ETF inflows far above expectations
In September alone, Western ETF holdings rose by 109 tonnes, far above Goldman’s model estimate of 17 tonnes based on lower US rates. The report said the jump shows that private investors are actively shifting money into gold, looking for safety amid uncertainty in developed markets.
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Because the gold market is relatively small – Western ETF holdings are worth only about 1.5 per cent of privately held US Treasuries-even modest diversification could fuel another sharp leg higher, it said.
Central banks return to the market
Central bank buying has also picked up after a quiet summer. Although data for September are still being compiled, Goldman said the increase in official demand likely explains a large part of the recent rally. It expects that structurally higher central bank demand will remain a key factor for prices in the years ahead.
Little sign of speculative froth
The report noted that speculative positions have contributed only a small part about one percentage point to the recent rally. That, it said, suggests deeper and more sustained interest from institutional and private investors, rather than short-term trading activity.
Hedge in an uncertain world
Goldman Sachs said gold’s appeal now goes beyond being a hedge against inflation or slowing growth. The bank called it a portfolio stabiliser, particularly in periods when equity and bond markets move together. “Gold remains an attractive hedge in downside scenarios less favourable for equity-bond portfolios,” the report said.
Small market, big moves
Because gold represents a small share of total global wealth, Goldman said even a small reallocation away from traditional assets could move prices sharply higher. “The gold market is relatively small,” the report said, adding that this makes it more sensitive to capital inflows from private investors and funds.
Still the top long-term call
Goldman Sachs reaffirmed gold as its top long-term commodity recommendation, citing strong demand from both official and private sectors, limited speculative froth, and its value as a hedge in uncertain markets.
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