Gold Prices Set to Soar Again Amid Central Bank Buying

Gold prices have been on a rollercoaster ride in 2026, reaching an all-time high of $5,100 per ounce in January and then pulling back by around 20% due to uncertainty over the Federal Reserve's leadership transition and the US-Iran conflict.

However, according to Goldman Sachs' global head of metals trading, Tony Kim, this pullback is just a pause, not a peak. He attributed it to two overlapping shocks: uncertainty around the Fed's incoming chair and his policy direction, and the disruption of energy, agriculture, and metals markets by the US-Iran conflict.

Kim said that the bull trend will resume with fresh record highs to follow, driven by central bank buying. Central banks have increased their gold purchases from around 400-500 tons per year to 1,000-1,100 tons annually, absorbing a much smaller share of newly mined gold and leaving less for jewellery, ETFs, and private investment.

In India, Prime Minister Narendra Modi has urged citizens to buy less gold to protect the rupee. The government's logic is that gold imports account for over half of India's trade deficit, and even a modest pullback in household buying would ease pressure on the rupee without resorting to import duties or capital controls.