Gold Prices May Soar Past $4,900 as Options Demand Surges

Gold prices are on track to surge past Goldman Sachs's $4,900 year-end forecast as strong demand for bullish gold options drives up the metal's value. In a recent note, the bank pointed out that rising investor demand and continued central bank buying could push bullion toward key option strike levels.

The options dynamic has created a mechanical price amplifier to both the upside and downside. As gold climbs toward these key strike levels, dealers who sold call options may be forced to buy bullion to hedge their exposure, amplifying the rally.

However, Goldman cautioned that this also means a price pullback could trigger dealers to unwind those hedges, deepening any sell-off.