Goldman Sachs Precious Metals Comment: Central Bank Gold Buying Remained Strong in July
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Goldman Sachs maintains its end-2026 gold price forecast of $4,900 per ounce, seeing net upside risk but greater two-way volatility along the way. Central bank buying stayed strong in July: China was the largest identified buyer at 35 tonnes, and Goldman's nowcast estimates central bank purchases of 44 tonnes, or 91 tonnes per month on a three-month seasonally adjusted basis versus a pre-2022 average of 17 tonnes. Gold call option demand has rebounded sharply, illustrated around rising Fed hike expectations after Middle East conflict intervention; if ETF inflows return while elevated call positioning persists, dealer hedging could mechanically amplify rallies and push prices well above the forecast. Conversely, if the Fed hikes, partial unwinding of macro policy hedges plus net selling from rate-sensitive ETFs could bring end-2026 gold to $4,440 per ounce, well below baseline but slightly above current levels, as central bank buying ultimately more than offsets. Speculative positioning often builds before high-uncertainty events—such as the 2016 Brexit vote and 2024 US election—and reverses sharply once outcomes are clear, a pattern that may recur around the US midterms. Medium term, risk skews upward given gold's still-low share in private portfolios, Iran-related geopolitical tension, and G10 fiscal sustainability concerns.
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