Quick overview

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Goldman Sachs predicts that central banks will increase their gold purchases, which will aid the recovery of prices by year’s end. Analysts Lina Thomas and Daan Struyven predicted that purchases would increase to an average of 60 tons per month through 2026.

The 12-month moving average of purchases increased from 29 tons in March to 50 tons under a revised framework for estimated accumulation.

The analysts cited an internal survey and stated that central banks have “strong underlying interest in gold, and recent geopolitical developments are likely to reinforce diversification over time.” Since the start of the Middle East conflict, gold has suffered because rising energy prices have increased global inflationary pressures, making central banks less inclined to loosen policy.

Global bond markets have sold off, putting pressure on non-yielding gold since there is no sign of an end to the conflict. Goldman’s assessment of official-sector activity follows an upbeat assessment from the World Gold Council

Spot gold was trading near $4,534 per ounce, down from a record of just under $5,600 set in late January.

Goldman maintained a bullish target for prices to rise to $5,400 per ounce by the end of this year.

However, Goldman was cautious for the time being. According to the analysts, gold is “a natural source of cash if private investors face liquidity needs — for example, if equity markets sell off amid higher rates and weaker growth expectations.”. A portion of Goldman’s central-bank buying estimation methodology was predicated on flows observed in UK trade data. It was revised because, according to the analysts, the numbers might “no longer fully reflect” changes.