Goldman Sachs Sees China Buying Record Amounts of Gold

Goldman Sachs estimates that China purchased 35 tonnes of gold in July, a significant amount nearly double what was officially disclosed. This is according to the bank's nowcast model, which also indicates that central banks globally bought an average of 44 tonnes of gold in July, compared to just 17 tonnes before 2022.

The seasonally adjusted, three-month trend shows central banks purchasing 91 tonnes a month on average. Goldman Sachs analysts Lina Thomas and Daan Struyven note that the high demand is likely due to reserve diversification and hedging against geopolitical and financial risks.

The bank's forecast assumes continued buying of an average of 50 tonnes a month in 2026 and 40 tonnes a month in 2027, which underpins its prediction of $4,900 per ounce by the end of 2026. However, Goldman Sachs notes that changes in US interest rate expectations and investor positioning in the options market could intensify volatility.

Goldman Sachs' base case also assumes a recovery in demand from gold-backed exchange-traded funds, with the Federal Reserve expected to keep interest rates on hold this year. The analysts see scope for gold to exceed $4,900 per ounce if ETF inflows recover and demand for gold call options remains elevated.