Goldman Sachs said central banks are expected to increase their gold purchases, helping gold prices rebound by year-end.
Analysts Lina Thomas and Daan Struyven said in a report on May 15 that procurement volumes are expected to rise to an average of 60 tons per month by 2026. According to the revised projected cumulative volume framework, the 12-month moving average procurement volume in March was 50 tons, up from the previous 29 tons.
Analysts, citing internal research, said central banks have a strong latent interest in gold, and recent geopolitical developments could strengthen diversification over time.
Since the outbreak of the Middle East war, gold prices have remained low, as rising energy costs intensified global inflationary pressures, reducing the likelihood of central banks easing monetary policy. With the conflict showing no end in sight, global bond markets have been sold off, putting further pressure on non-yielding gold.
Goldman Sachs’ assessment of official sector activity aligns with the World Gold Council’s optimistic outlook. The council estimates that central banks purchased 244 tons of gold in the first quarter, up from 208 tons in the previous three months.
Spot gold traded near $4,534 per ounce, down from the historical high of just under $5,600 set in late January. Goldman Sachs maintained its bullish outlook, forecasting gold to rise to $5,400 per ounce by year-end, following similar predictions from UBS and ANZ.
However, Goldman Sachs remains cautious about the short-term outlook. Analysts say that if private investors face liquidity needs—such as during a stock market sell-off amid rising interest rates and weak growth expectations—gold “is a natural source of cash.”
Goldman Sachs previously estimated the scale of central bank bond purchases based partly on assumptions about capital flows from UK trade data. Analysts said the firm has updated its methodology, as these data may “no longer fully reflect” market developments.
