Goldman Sachs: Gold Price to Reach $4,000/oz Next Year

Goldman Sachs, the largest US investment bank, and UBS, the largest Swiss bank, have once again raised their gold price forecasts, as demand from central banks will be even greater than expected and more and more investors are seeking protection against economic recession and geopolitical risks.

Goldman Sachs analysts expect the price of gold to rise to $3,700 an ounce by the end of this year. By mid-2026, they estimate the price of an ounce should reach $4,000. UBS strategists expect gold to trade at $3,500 by the end of the year.

If an extreme risk scenario materialises, i.e. the worst-case scenarios of a trade war and economic recession, gold could rise to $4,500 by the end of this year, Goldman analysts said.

The Rapid Rise has Continued

The price of gold rose 6.6 percent in dollar terms last week, the biggest weekly increase since 1999. In the first quarter, gold rose by a whopping 19 percent, the fastest quarterly increase since 1986.

The most recent record was set on Monday this week, when an ounce rose to $3,245. At the beginning of last year, gold was trading below $2,000. Gold is currently trading at $3,220.

Goldman analysts said central bank demand for gold will be about 80 tonnes per month this year, up from a previous forecast of 70 tonnes. Rising recession risks could also fuel inflows into gold-backed exchange-traded funds (ETFs), they added.

Fund Inflows are Higher Than Expected

“Recent flows [into ETFs] have surprised us on the upside, likely reflecting increased demand driven by recession risk. Falling prices in riskier assets have also played a role,” Goldman analysts said. Goldman estimates a 45 percent chance of a recession this year.

If the recession scenario materialises, inflows into ETFs could increase further, pushing prices to $3,880 an ounce by year-end.

The chart below shows how gold inflows into exchange-traded funds have increased sharply this year. In particular, interest in gold from American investors has skyrocketed.

Meanwhile, Switzerland’s largest bank, UBS Group, expects demand for gold to grow broadly – from central banks to various investment funds and asset managers. As major changes are taking place in global trade and geopolitics, the proportion of safe-haven assets will increase.

Increase in the Share of Gold in Portfolios

UBS strategist Joni Teves said there is still plenty of room for investors to increase their gold holdings and “not too many people” have entered the market yet.

“The share of gold in all funds’ assets may exceed 2020 levels, but it may not necessarily reach the level of 2012-13,” Teves added. He also specified that the gold investor base has grown since the 2008 financial crisis.

Continued uncertainty creates the need to diversify your portfolio, which is beneficial for gold.

According to Teves, the market is becoming somewhat tighter, as mining growth is low and much of the gold is locked up in central bank vaults and exchange-traded funds. These circumstances could mean that price movements resulting from increased demand will be sharper.

Key Takeaways

With gold prices already soaring and global uncertainties showing no signs of slowing down, both Goldman Sachs and UBS project a strong bullish outlook for the precious metal.

Central bank demand, rising investor interest, and geopolitical instability are all aligning to push gold to potentially record-breaking levels. As the world braces for economic turbulence, gold continues to prove its value not just as a safe haven, but as a strategic and timely investment.

Whether you’re a seasoned investor or just entering the market, the coming months may offer a golden opportunity.