Central Banks Fuel Gold Price Surge Amid Call Option Pressure

Gold prices are expected to climb as central banks increase their purchases of the precious metal, according to Goldman Sachs Research. The forecast suggests that gold will reach $4,900 per troy ounce by the end of 2026.

The rise in gold prices is also being driven by call options that are approaching key strike levels. As a result, options dealers who sold these calls must buy gold to hedge their short exposure, which accelerates the rally.

If the gold price declines, however, these same dealers may reverse their hedges by selling their gold holdings, potentially driving prices even lower.