Gold Prices Seen Reaching $4,900/oz by Year-End as Central Banks Boost Demand

Gold prices are expected to rise to $4,900 per ounce by the end of 2026, driven by strong demand from central banks seeking to diversify their foreign currency reserves. Goldman Sachs Research forecasts that gold will extend its recent gains in the second half of 2026, despite growing use of some derivatives tied to the metal.

Central bank demand is seen as a key structural factor underpinning gold's rally. Goldman Sachs Research expects central banks to buy an average of 50 tonnes of gold per month in 2026, up from an average of 17 tonnes per month in the years before 2022. This trend was evident in June 2026, when sovereign purchases accelerated to 100 tonnes per month on a three-month seasonally adjusted basis.

The report also highlights interest rate expectations as another key factor driving gold prices higher. As markets scale back expectations of a Federal Reserve rate hike in 2026, demand from some investors is starting to recover. Goldman Sachs Research expects the Fed-related headwind to abate further, as its economists predict a lower inflation trend will keep the Fed on hold this year.

Gold's share in private portfolios remains low, and recent geopolitical developments may accelerate diversification beyond central banks to private investors. The report notes that demand for gold call options is on the rise as investors use them to hedge their portfolios against large-scale changes in government policies, and this has the potential to amplify price swings in both directions.