U.S. investment bank Goldman Sachs (GS) is urging investors not to read too much into Gold’s (XAUUSD) sudden stumble, arguing that the recent pullback is merely a pause in an otherwise powerful rally. In its latest outlook, the bank highlighted the forces behind both gold’s meteoric rise this year and its recent weakness, setting the stage for its call that the metal’s retreat is unlikely to last. Moreover, the bank is projecting a gold price closer to $5,000 by the end of next year.
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All in all, gold prices have enjoyed a stellar 2025, rising nearly 60% and repeatedly setting fresh record highs. This year’s surge has been fueled by a combination of safe-haven demand and shifting monetary expectations.
Persistent geopolitical tensions and uneven global growth have kept investors seeking refuge in hard assets, while expectations of eventual Federal Reserve easing have lowered real yields and boosted bullion’s appeal. At the same time, continued central-bank buying—especially from emerging markets—has added steady structural support, helping drive prices to a series of record highs.
And yet, the past month has brought a sharp reversal from its all-time high of $4,336 an ounce on October 30; the yellow metal has slipped about 6% to roughly ~$4,150. A strengthening U.S. dollar and the fading likelihood of a December Federal Reserve rate cut have weighed on prices, making gold less attractive relative to interest-bearing assets. Even so, Goldman Sachs views the downturn as temporary rather than the start of a sustained slide.
Goldman Sachs’ Outlook: $4,900 by End-2026
Goldman Sachs forecasts that gold will climb to $4,900 per ounce by the end of 2026, implying roughly 20% upside from current levels. In an interview with Bloomberg, the bank’s head of commodities research, Daan Struyven, argued that the same forces behind gold’s surge this year will persist well into next year.
Two factors dominate their bullish thesis:
- Central bank accumulation, including structurally higher central bank purchases in emerging markets
- The Federal Reserve’s rate-cutting cycle
One of the strongest structural supports for gold has been central banks’ decisive buying. Reserve managers in emerging markets accelerated purchases after Russia’s foreign reserves were frozen in 2022, highlighting the geopolitical risks associated with holding foreign-currency assets.
Gold, held in a domestic vault, offers protection against sanctions and currency volatility. Goldman expects this diversification trend to continue through 2026, keeping a solid floor under prices.
The bank also anticipates the Fed taking action by cutting interest rates by ~0.75% by mid-2026, with other central banks likely to follow. Lower rates weaken the dollar and increase the appeal of non-yielding assets such as gold. Investors seeking inflation hedges or protection against fiat currency debasement may increasingly turn to bullion.
Retail Investors Could Amplify the Upside
The bank notes that even modest diversification by private investors could push gold prices higher than forecast. The gold ETF market is tiny—around 70x smaller than the U.S. Treasury market—meaning small capital shifts can have an outsized price impact.
Given these trends, Goldman Sachs continues to rank gold as its top long commodity recommendation, citing strong upside potential in both base-case and risk-driven market scenarios.