Will Gold Rise Further? Goldman Sachs Targets $5,400, and Another Institution Boldly Forecasts $7,000.

TradingKey - The rules of the game in the gold market are being rapidly rewritten. The buying structure once dominated by central banks is now being redefined by private institutional investors, family offices, and high-net-worth individuals. Amid rising global policy risks, they are pouring into the gold market on an unprecedented scale, using gold as a vital asset to hedge against macroeconomic uncertainty.

On Wednesday, international gold prices surged above $4,800 per ounce, continuing to set new record highs. Despite a slight pullback, London spot gold remained stable near that threshold, extending its sustained gains of over 70% over the past 12 months.

Discussions in the market regarding 'how high gold can rise' have heated up once again. Following last year's record-breaking performance, the trend for 2026 has become a central focus for investors.

In its latest research report, Goldman Sachs significantly raised its year-end 2026 gold price target from $4,900 to $5,400 per ounce, an increase of over 10%. The bank emphasized that structural position-building by private investors will be the primary driver pushing gold prices to new highs in the future.

Goldman Sachs analysts Daan Struyven and Lina Thomas pointed out that the key to rising gold prices lies in a 'deep shift in risk appetite.' Unlike previous short-term hedging positions established around single political events (such as the 2024 U.S. election), the current rally sees private investors opting for more 'sticky' gold allocations due to long-term concerns over fiscal sustainability, central bank independence, and monetary stability. They view it more as long-term insurance against systemic risk rather than a play on short-term volatility.

Meanwhile, more aggressive forecasts have emerged in the market. Julia Du, Senior Commodities Strategist at ICBC Standard Bank, has issued a target price as high as $7,150.

Goldman Sachs Deconstructs the Three-Year Rally

In its report, Goldman Sachs divides the gold price rally of the past three years into two stages:

Phase One (2023–2024): A steady climb dominated by central bank gold purchases. Since the freezing of the Russian central bank's foreign exchange reserves, emerging market countries have begun to reassess the availability and neutrality of their reserve assets, choosing to increase their gold allocations. Sustained buying by central banks became the main driver of gold price gains during this period.

Phase Two (Starting 2025): Growth accelerates significantly, driven by an escalating battle for 'limited gold bars' in the gold market. Goldman Sachs noted that the core shift in this phase is central banks beginning to compete with private investors for the limited physical gold supply, creating an 'overlay effect' on the demand side.

Specifically, two main channels are jointly driving market demand beyond 2025:

On one hand, as the Federal Reserve initiated a loosening cycle at the end of 2024, Western gold ETFs have once again attracted significant capital inflows, serving as a major channel for traditional investment funds returning to gold.

On the other hand, new forms of buying are becoming increasingly active, such as high-net-worth families purchasing physical gold for long-term storage and investors using more complex and difficult-to-track methods like call options for macro hedging.

Regarding structural changes, Goldman Sachs believes this post-2025 rally marks a transition of the gold market from being official-institution-centric to one driven by the resonance of both public and private capital. Both central banks and the private sector are seizing the limited supply of gold bars, pushing gold prices into an accelerated upward phase.

Goldman Sachs stated that 'sticky hedge' allocations will persist for the long term. Unlike short-term safe-haven positions driven by specific events, these types of macro-policy-driven hedges are more likely to endure in the coming years' environment rather than being unwound after 2026.

In other words, even though gold is currently at record highs, this price is not inflated but is built on the expectation that 'risks cannot be resolved in the short term.'

Central Banks Provide a Floor, ETFs Assist

In its new gold forecasting framework, Goldman Sachs proposed that by the end of 2026, gold prices are expected to rise by a cumulative 17% compared to the average level in January 2026, or about 13% if calculated based on the spot price. This growth is primarily driven by two 'quantifiable' categories of demand.

First is the sustained gold buying by central banks. According to Goldman's assumptions, average monthly global central bank gold purchases will remain around 60 tons in 2026 and are expected to be 50 tons in 2027, staying at high levels. This trend continues the long-term logic of emerging market central banks diversifying their reserve structures, with an estimated contribution of about 14 percentage points to the support of gold prices.

Second is the return of ETF capital in Western markets. Goldman Sachs further noted that if the Federal Reserve cuts interest rate by another 50 basis points in 2026 as expected, gold's non-interest-bearing attribute will regain its appeal, driving a recovery in ETF holdings and providing an additional boost of approximately 3 percentage points to gold prices.

Watch for Three 'Inflection Point Signals'

In its latest report, Goldman Sachs' expression of risk regarding gold price trends is rather intriguing. While acknowledging 'two-way possibilities,' the overall inclination remains that the upward trend will dominate.

This upward-biased judgment is primarily based on Goldman's view that the private sector is likely to continue increasing its asset allocation to gold against a backdrop of prolonged global uncertainty.

However, if macro-policy risks ease significantly in the future—for instance, if fiscal or monetary policy paths become clearer and uncertainty factors decrease—it could trigger an unwinding of some hedging positions, exerting downward pressure on gold prices.

Goldman Sachs pointed out that unlike most commodities, the supply side for gold has a relatively limited impact on price. Therefore, the key to its price ceiling usually comes from a contraction in demand rather than an expansion in supply.

In other words, 'high prices will not naturally limit their own rise as they do with other commodities,' because the feedback from new gold production to prices is extremely lagged; price reversals are more often driven by a slowdown in buying.

When assessing whether prices are near a peak, Goldman Sachs suggests the market focus on 'three checkpoints,' primarily centered on changes in demand:

First, closely monitor whether the pace of gold purchases by central banks slows significantly. If monthly gold purchase volumes fall back to pre-2022 levels (around 17 tons per month), it could signal that the fever for diversifying reserves is cooling, weakening the floor that central bank buying provides for the gold market.

Second, it is necessary to closely track the Federal Reserve's policy moves. If interest rate cut expectations are reversed in favor of a rate hike path, it could simultaneously suppress ETF inflows and private sector risk-hedging demand. This is because rising opportunity costs and eased concerns over central bank independence would diminish the appeal of gold assets.

Third, if long-term fiscal and monetary policy directions become more certain and market confidence returns, the private sector might proactively reduce positions in safe-haven assets like gold based on their subjective judgment of 'macro stability.' Once 'macro insurance' is no longer seen as necessary, the long-term support for gold prices will also loosen.

Looking ahead, Goldman Sachs believes gold still has upside potential, but the sustainability of the rally will depend on whether risk-hedging demand remains strong. If policy uncertainty persists, private investors are expected to further increase their allocations. Conversely, once disruptive factors gradually fade, gold may face the dual pressure of declining momentum for increased holdings and the risk of price corrections.

Multiple Institutions 'Unanimously Bullish' as Gold Becomes the Ultimate Safe Haven

It is not just Goldman Sachs raising gold price forecasts; the overall market sentiment is also shifting toward greater optimism. Several analysts noted that after a record-breaking 2025, the gold market has maintained its strong momentum since early 2026. Persisting geopolitical risks, declining U.S. real interest rates, and the accelerating trend of asset diversification and de-dollarization by global central banks and investors have collectively cemented gold's status as the 'ultimate safe-haven asset.'

According to the latest forecast survey released by the London Bullion Market Association (LBMA), bolstered by the Federal Reserve's continued loosening policy, lower real interest rates, and central bank diversification, gold prices are expected to break the $5,000 mark this year. The LBMA noted in its report that 'after a record-breaking 2025, gold remains in the headlines.'

Meanwhile, Julia Du stated that given the changes in the global monetary environment and the sustained trend of gold hoarding, prices could be pushed even higher to a peak of $7,150.

Nicky Shiels, Head of Metals Strategy at MKS PAMP, pointed out that the current upward trend in gold is not short-term hype, nor does it belong to a typical speculative bubble, but is a continuation of a long-term trend built on global structural changes.

Shiels expects gold prices to reach $5,400 this year, which, while indicating a slowdown compared to the 2025 peak, still represents an annual increase of about 30%.

She stated, 'Last year was undoubtedly a historic one, with gold prices rising by a cumulative 60% and silver prices even doubling. While such extreme gains are unlikely to recur in the short term, a $5,400 forecast represents a healthy long-term bull market rather than a speculative surge before a commodities collapse.'

She also emphasized that several geopolitical events are continuously strengthening gold's safe-haven appeal. For example, U.S. military and economic pressure on Venezuela, along with its strategic moves to control key resources in Greenland, are heightening market concerns over global political uncertainty.

Shiels remarked, 'We are entering a decade that is extremely sensitive to the security of critical metals and commodities.'