According to the Zhitong Finance APP, Goldman Sachs stated on Wednesday that it believes there is significant upside potential for its prediction of gold prices reaching $4,900 per ounce by the end of 2026.
&#34;Recently, some investors have called for an increase in the allocation ratio of gold,&#34; the analysts said. They pointed out that current gold holdings are at a low level, and the trend of diversification in asset allocation may be turning, which will collectively enhance the investment attractiveness of gold as a precious metal.
This view aligns with recent statements from Dan Struyven, head of oil research at Goldman Sachs. On November 26, Struyven noted that even if retail investors only slightly increase their holdings and participate in asset diversification, it could still provide significant upside potential for the $4,900 per ounce gold price prediction.
&#34;We predict that by the end of 2026, gold prices still have nearly 20% upside potential, with the target price rising to $4,900 per ounce,&#34; he analyzed. &#34;Although this increase will not replicate this year's rapid momentum—gold prices have risen nearly 60% year-to-date—it is our belief that the two core factors driving gold prices higher in 2025 will continue to play a role in 2026.&#34;
The first driving factor is the structural increase in central bank gold purchases. &#34;Since the Russian central bank's reserves were frozen in 2022, (emerging market) reserve managers have received this significant wake-up call that they need to diversify their reserves into gold, as once gold is stored in the national treasury, it is the only truly safe asset.&#34;
The second core driving factor stems from the Federal Reserve's interest rate cut cycle. Struyven analyzed, &#34;As gold is a non-yielding asset, its attractiveness increases in a rate-cutting environment, leading to accelerated inflows into the gold ETF market.&#34; He further pointed out, &#34;Our economic model predicts that the Federal Reserve will cumulatively cut rates by another 75 basis points in the future.&#34;
&#34;We are supported by both central bank gold purchases and private investors.&#34;
After central bank gold purchases, the next driving force for gold may come from diversification in the private sector.
When asked how the recent resilience of the dollar would affect its gold forecast (especially considering that depreciation trades are one of the key variables in the current analysis framework), Struyven provided a detailed response.
He replied, &#34;The core driving factor for current gold demand still focuses on central bank diversification, but the scope of this trend is expected to further expand. If private sector investors accelerate their entry, it will resonate with our existing bullish gold forecast, opening up greater space for price increases.&#34;
Struyven explained, &#34;I believe the key intuition behind the significant rise in gold prices due to private sector diversification is that the gold market is relatively small. If we look at global gold ETFs, their scale is only about 1/70 of the U.S. Treasury market, so only a relatively small diversification step from the global bond market is enough to significantly push up gold prices.&#34;
Struyven stated that this is also another reason why Goldman Sachs currently lists gold as its preferred long commodity.
&#34;In the baseline scenario, you have significant upside potential; and in scenarios where market performance may be poor—such as concerns about fiscal trajectories or doubts about the independence of the Federal Reserve—I believe gold will perform even better than in the already quite attractive baseline scenario
On October 6, Goldman Sachs raised its gold price forecast for 2026 from $4,300 per ounce to $4,900, stating that the additional increase will be driven by strong inflows of Western ETF funds and ongoing central bank gold purchases.
Goldman Sachs analysts wrote: &#34;We believe that the risks facing the revised gold price forecast are generally skewed to the upside, as the private sector diversifies into the relatively small gold market, which may lead to ETF holdings exceeding our estimates based on interest rate expectations.&#34; They indicated that as the Federal Reserve is expected to cut the federal funds rate by 100 basis points before the second quarter of 2026, Western ETF holdings are anticipated to rise.
Goldman Sachs also projected that central bank gold purchases would average 80 tons in 2025 and 70 tons in 2026, noting that emerging market central banks may continue to diversify their reserves from the dollar into gold.
Against the backdrop of strong purchases by major central banks, increased demand for gold ETFs, a weakening dollar, and growing interest from retail investors to hedge against trade and geopolitical tensions, spot gold prices have risen nearly 60% year-to-date.
Analysts stated: &#34;In contrast, the noisier speculative positions have remained relatively stable. After a significant increase in September, Western ETF holdings have now fully caught up to our estimates based on U.S. interest rates, indicating that the recent strength of ETFs is not an overextension.&#34;

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Goldman Sachs is optimistic about gold, predicting that by the end of 2026, the price of gold will reach $4,900 per ounce, indicating significant upside potential. Analysts point out that low gold holdings and a trend towards diversified asset allocation are enhancing the attractiveness of gold investments. The increase in central bank gold purchases and the Federal Reserve's interest rate cut cycle are the main driving factors

Goldman Sachs maintains a strong bullish outlook on gold: target price of $4,900 by 2026