Goldman Sachs continues to project that gold will reach $5,400 per troy ounce by the end of 2026, reaffirming a forecast that relies on a combination of monetary policy easing, a cleaner speculative market structure, and a re-acceleration of official sector purchases.
The bank's analysts, Lina Thomas and Daan Struyven, maintain the view despite a roughly 15% decline in bullion to about $4,580 per troy ounce since the onset of the recent conflict in the Middle East. They attribute the price retreat principally to the character of that conflict and the effect it has had on energy markets and inflation expectations.
According to the analysts, the energy supply shock associated with the war has heightened inflation concerns and prompted markets to push out expectations for Federal Reserve rate cuts for this year entirely. Under that environment, Goldman Sachs estimates a current fair value for gold near $4,550 per troy ounce, a level based on the assumption that macro policy hedges that were in place before the conflict remain intact.
Another important contributor to the recent drop in prices was a record level of call option demand earlier in the year. High call-option activity left gold vulnerable to an outsized setback if equities experienced even a modest correction. As the bank noted previously, that positioning carried the risk of an amplified move lower and suggested a potential floor around $4,700 in an early phase of such a correction.
With the sharp selloff having largely unfolded, net speculative positioning on Comex has retraced to the 39th percentile and the earlier call-option overhang has been mostly unwound. The analysts say this has left the market in a "cleaner" state and, in their view, at a "more attractive entry point." The combination of reduced speculative exposure and the removal of the call overhang is central to Goldman’s constructive medium-term outlook.
Thomas and Struyven also addressed the debate over whether gold has failed to serve as a safe-haven or an inflation hedge in this episode. They emphasize that gold’s performance depends on the type of inflation shock. Supply-driven stagflation, which they characterize as the current environment, has historically tended to favor commodities over gold. By contrast, gold typically performs best when the inflation concern stems from institutional credibility risks - for example, when there are doubts about a central bank’s ability to control inflation.
"Like in 2022, gold typically underperforms initially in supply disruption episodes," the analysts wrote. They explained that supply-driven inflation increases the likelihood of tighter monetary policy, and higher yields raise the opportunity cost of holding gold - factors that can weigh on exchange-traded fund demand and that, when combined with equity market drawdowns, can trigger margin-related liquidations.
On the question of official sector selling, the analysts pushed back on fears that Gulf states might emulate reports of a significant disposal by Turkey - which reportedly sold about 52 tonnes. They note that Gulf nations generally have much smaller gold allocations within their reserves and tend to operate dollar-peg currency regimes, which makes U.S. Treasury sales more plausible than gold liquidations for those countries.
Goldman’s baseline scenario is built around three pillars and attaches rough price contributions to each. First, a normalization of speculative positioning is estimated to be worth around $195 per troy ounce. Second, Goldman’s economists expect 50 basis points of Fed rate cuts, which the analysts estimate would add roughly $120 per troy ounce. Third, a return to stronger central bank buying - at about 60 tonnes per month - is projected to contribute approximately $535 per troy ounce.
The bank does flag material downside risks. In a severe liquidation scenario - for example, one that involved a prolonged disruption in the Strait of Hormuz combined with further equity weakness - gold could fall as low as $3,800 per troy ounce, the analysts warned. On the upside, should geopolitical dynamics accelerate diversification away from Western assets - with developments in places such as Greenland and Venezuela cited as potential catalysts - prices could rise toward $5,700 or even $6,100.
Goldman also points to the relatively low exposure to gold within Western private portfolios as a structural source of potential upside. ETF holdings represent about 0.2% of U.S. private sector portfolios, leaving what the analysts describe as ample room for allocations to increase if sentiment shifts and inflows resume.
In sum, the bank retains a bullish year-end 2026 target while acknowledging that the current environment - shaped by supply-driven inflationary pressures and recent speculative dynamics - has created distinct near-term headwinds. The trajectory toward the $5,400 target, according to Goldman, hinges on a combination of cleaner market positioning, eventual Fed easing, and renewed official sector demand.
Key points
- Goldman Sachs keeps a $5,400/oz target for end-2026, citing expected Fed cuts, normalized speculative positioning and resumed central bank buying.
- Recent declines - about 15% to roughly $4,580/oz - were driven by a supply shock that raised inflation concerns and by an earlier overhang of call-option demand.
- Sectors affected include precious metals markets, fixed income (through Fed policy and Treasury flows), equity markets (via forced liquidations), and energy (through supply-driven inflation dynamics).
Risks and uncertainties
- A prolonged disruption in the Strait of Hormuz combined with further equity market weakness could push gold down to about $3,800/oz - a severe liquidation scenario impacting commodities and financial markets.
- Continued supply-driven inflation that pressures central banks into tighter policy would raise yields and increase the opportunity cost of holding gold, dampening ETF demand and weighing on prices.
- Official sector selling dynamics are uncertain; while Gulf states are seen as less likely to liquidate gold reserves, portfolio shifts in some countries could alter market flows and affect Treasury and gold markets.