By Tom Ozimek
Goldman Sachs said gold prices are poised to extend their record-breaking rally through 2026, with the potential to climb far beyond current levels depending on how central banks, private investors, and U.S. monetary policy evolve.
In its Sept. 3 note “Diversify Into Commodities, Especially Gold,” Goldman set out three potential paths for bullion, each reflecting a different mix of monetary and political forces, but all pointing to further gains for gold.
Three Scenarios for Bullion
The baseline projection sees gold reaching $4,000 per ounce by mid-2026, driven largely by continued central-bank accumulation and expectations that the Federal Reserve will soon pivot toward rate cuts.
Emerging-market central banks have been especially active buyers since the freezing of Russian reserves in 2022 underscored the vulnerability of foreign-exchange holdings. Purchases on the London over-the-counter market have risen fivefold since then, with Goldman earlier noting that this steady buying has “structurally raised the floor” under prices.
A second, more adverse “tail-risk” scenario would push gold closer to $4,500 per ounce if private investors joined central banks in shifting out of dollar assets.
Goldman said such a move could be sparked by mounting political pressure on the Fed, eroding confidence in its independence. That in turn could mean higher inflation, weaker stocks and bonds, and a diminished dollar—conditions under which gold, as a store of value, independent of institutional trust, would draw heavier demand.
The most extreme case envisions bullion nearing $5,000 an ounce. Such an outcome would not require wholesale financial upheaval, Goldman argued, but simply a relatively modest portfolio shift: If just 1 percent of the privately held U.S. Treasury market—worth more than $24 trillion—were reallocated into gold, prices could reach that level assuming other drivers remain constant.
A Rally Fueled by Uncertainty
Spot gold was near $3,552 per ounce on Sept. 4, paring an intraday drop after touching a record above $3,578 earlier in the week. Bullion has already gained more than one-third this year, far outpacing the S&P 500’s roughly 7 percent rise, as investors sought protection against both monetary and geopolitical risks.
Gold’s steady rise was amplified in an August surge, when confusion over U.S. Customs rulings raised fears that Swiss-made gold bars might be subject to tariffs under President Donald Trump’s reciprocal trade framework.
Futures briefly spiked above $3,510 per ounce before easing after the White House pledged to exempt the metal. Trump later declared that “gold will not be tariffed,” helping to steady prices after the confusion briefly fueled panic buying.
Analysts say the rally has been sustained by several converging forces.
“The main drivers are: a weakening dollar, expectations of the Fed rate cut in September, and growing doubts about the Fed’s independence amid mounting political pressure,” Eugenia Mykuliak, founder and executive director of financial services provider B2PRIME Group, told The Epoch Times in an emailed statement.
“Altogether, these factors make gold more attractive as a safe place to store money.”
Mykuliak added that central banks in China, Turkey, and India continue to build reserves, while exchange-traded funds have posted steady inflows.
“U.S. Treasuries and the dollar carry more risks than before, so gold has now become a fallback option. Technical momentum also supports the move, and I expect the price to head toward $3,600–$3,800 as the next target range, with $4,000 as a realistic peak,” she said.
ING analysts echoed those views in a note this week, pointing to persistent geopolitical tensions and renewed expectations of Fed easing as additional support for precious metals.
“Tariff tensions, along with questions over the Fed’s independence and a weakening dollar, are adding to the tailwinds for the precious metals,” they wrote.
Safe-Haven Reappraisal
Behind gold’s momentum is a broader reappraisal of safe-haven assets, according to Goldman. Since the invasion of Ukraine and the freezing of more than $280 billion in Russian reserves, central banks have grown wary of holding too much in foreign securities, especially U.S. dollars and euros. Many have turned to gold, which can be stored domestically and lies outside the reach of sanctions.
“The freezing of Russian assets in Brussels showed that foreign reserves could potentially be confiscated. As a result, governments have been buying much more gold,” Goldman analysts wrote in a May note.
Developed economies already hold the bulk of their reserves in bullion, but emerging markets have been steadily catching up, with China still holding less than 10 percent of its reserves in gold compared with about 70 percent for the United States and Germany.
In its latest note, the bank concluded that even modest changes in allocation could have an outsized effect on the market, stating that “gold remains our highest-conviction long recommendation.”
Reuters contributed to this report.
