Gold Surges Past $4,600 on Central Bank Buying and Easing Rate Expectations

Gold prices have surged past $4,600 an ounce as central banks step up their buying, driven by expectations of easier US monetary policy and geopolitical uncertainty.

According to Goldman Sachs, the shift in demand is structural, with official-sector purchases becoming a key driver of gold's rally. Central banks are increasingly treating gold as a strategic reserve asset rather than just a hedge against inflation or market volatility.

The bank estimates that central banks could buy an average of 50 tonnes of gold per month in 2026, well above the pre-2022 monthly average of around 17 tonnes. This uptick in demand has been fueled by the Western governments' decision to freeze Russia's foreign-exchange reserves following the invasion of Ukraine.

Falling-rate expectations could provide another boost to gold prices, making it less attractive when interest rates and bond yields are high. Goldman Sachs expects US monetary policy to become less of a headwind for gold as expectations of further rate hikes fade and inflation pressures ease.