Goldman still sees gold price at $5,400 by year-end despite downturn

Goldman Sachs Group Inc. retained its bullish view on gold despite the recent selloff, forecasting renewed gains by the end of 2026.

Gold’s medium term outlook remains intact and the precious metal may reach $5,400 an ounce, analysts Lina Thomas and Daan Struyven said in a note, citing continued central bank purchases and two more US rate cuts this year.

Bullion still faces “tactical downside risks” in the short term, and could drop as low as $3,800 an ounce should the energy supply shock worsen, they said. Still, the upside remains significant if the Iran war were to contribute to accelerated diversification from “traditional Western assets.”

Gold has fallen 13% since the war began a month ago, after a downturn in equities forced investors to liquidate positions and the market started factoring in tighter monetary policies. But that repricing has “overshot, reflecting an over-emphasis on the inflation channel relative to the growth drag,” the analysts said, adding that history shows that growth concerns eventually dominate.

Concerns that some central banks may sell gold to support their currencies are unlikely to materialize, they said. Gulf countries are more likely to intervene by liquidating US Treasuries as they “typically operate dollar pegs,” they said.

Assuming no additional private sector investment, the analysts said they expect price volatility to moderate in the medium term, allowing official sector purchases to accelerate again and average around 60 tons a month.

(By Yihui Xie)