Goldman Sachs' Struyven sees gold hitting $4,900 on central bank and Fed tailwinds

Gold prices are forecast to rise to $4,900 per ounce next year, according to Daan Struyven, head of oil research at Goldman Sachs. 

This expected surge is driven by continued strong demand from central banks and ETF investors, with the potential for an even greater increase if retail investors enhance their gold diversification.

Struyven, in a Wednesday morning interview with Bloomberg TV, reiterated the investment bank's highly bullish stance on the yellow metal.

Bullish forecast

“We look for nearly 20% of additional price upside by the end of 2026, with our forecast at $4,900 per troy ounce by the end of ’26,” he said. 

A major factor driving this trend is the structurally elevated level of central bank purchases. 

The freezing of Russia's central bank reserves in 2022 served as a stark "wakeup call" for emerging market reserve managers, prompting them to diversify into gold. 

Gold is viewed as the only genuinely safe asset, provided it is held in domestic vaults.

The Federal Reserve's rate-cutting cycle is the second major factor influencing this. 

According to Struyven, Fed rate cuts typically encourage inflows into the gold ETF market because gold is a non-yielding asset. "Our economists project an additional 75 basis points of Fed cuts," he noted.

Dollar impact and diversification

Given that the 'debasement trade' was part of their calculations, Struyven was questioned about how the US dollar's recent resilience affects their gold forecast.

“I would think of a potential broadening of the diversification theme, which currently is quite restricted to central banks,” he added. 

The primary insight regarding the potential for gold price increases stemming from private sector diversification is the relatively small size of the gold market, as Struyven noted. 

He elaborated that global gold ETFs are approximately 70 times smaller in value than the US Treasury market. 

This means that even a minor move to diversify out of, for example, global bond markets, is sufficient to drive a significant upside in the gold price.

This potential for significant price appreciation is cited by Struyven as a further reason why gold is currently Goldman Sachs’ top-ranked long commodity recommendation.

Goldman Sachs revised its 2026 gold price prediction upward on October 6, moving it from $4,300 to $4,900 per ounce. 

Strong ETF inflows and central bank demand

The price revision was attributed to projected strong inflows into Western Exchange-Traded Funds (ETFs) and continued purchasing by central banks.

Goldman Sachs analysts believe the risks to their revised gold price forecast are "still skewed to the upside." 

They suggest that private sector diversification into the relatively small gold market could lead to ETF holdings surpassing their current estimate, which is based on interest rate predictions. 

The bank anticipates an increase in Western ETF holdings as the Federal Reserve is expected to lower the funds rate by 100 basis points by the second quarter of 2026.

Goldman Sachs forecasts that central bank gold purchases will average 80 tonnes in 2025 and 70 tonnes in 2026. 

The firm notes that central banks in emerging markets are expected to continue diversifying their reserves by shifting away from the US dollar and into gold.

Several factors have contributed to the nearly 60% year-to-date increase in spot gold prices. 

These include significant purchases by central banks, a surge in demand for gold-backed ETFs, a decline in the value of the dollar, and greater interest from retail investors seeking to hedge against economic and geopolitical uncertainty.