【Gold Price Trend】Goldman Sachs: Maintains year-end gold price forecast of $5,400 supported by central bank gold purchase demand

Gold prices have shown signs of stabilization after nine consecutive trading days of decline. Although short-term prices remain under pressure, investment bank Goldman Sachs states that this wave of decline is generally in line with previous trends and maintains its forecast that gold will reach $5,400 per ounce by the end of the year.

Daan Struyven, co-head of Goldman Sachs’ Global Commodities Research Department, said on Wednesday (25th), “Based on our current pricing framework, this decline is not surprising.” He believes that rising expectations of interest rate hikes are a direct factor suppressing gold investment demand.

He pointed out that as U.S. bond yields are expected to rise, the opportunity cost of holding gold increases, directly leading to redemptions from gold exchange-traded funds (ETFs).

Additionally, during extreme market volatility, gold is often used as a tool for profit-taking or liquidity supplementation. When investors face margin calls on other asset classes, highly liquid gold is often sold off together, further intensifying downward pressure on gold prices.

Gold Price Adjustment Reflects Market Returning to Normal

Gold’s earlier gains have significantly overshot fundamental expectations, and the current correction reflects a return to normal market conditions, according to Goldman Sachs analysis.

However, the bank remains optimistic, expecting gold prices to reach $5,400 by the end of the year. This optimism is supported by ongoing central bank gold purchases, as governments seek to diversify assets into “politically and financially lower-risk” assets.