Gold Prices Predicted to Soar to $4,900 as Central Banks Boost Demand

Gold prices are expected to rise to $4,900 per troy ounce by year-end, according to Goldman Sachs. The analysts believe that gold will continue to be in high demand due to central banks' accumulation of reserves to hedge against geopolitical and financial risks.

The demand for reserve diversification and a scaling back of expectations for rate hikes in the U.S. are expected to contribute to this price rise. Central banks have been purchasing 50 tonnes per month this year, representing an almost 300% increase from 17 tonnes per month before 2022. In June, Goldman Sachs found that central banks purchased an average of 100 tonnes, a significant rise from May figures which reached 66 tonnes.

The analysts also expect the 'Fed-related headwind to abate further', as they believe that the lower inflation trend will keep the Federal Reserve on hold this year. This stable rate environment is expected to lure investors towards gold, which tends to perform well in these scenarios.