Fearless of sell-offs! Goldman Sachs remains bullish on gold: medium-term outlook is solid, with a potential price of $5,400 by the end of the year

China Financial News (Cailianshe) March 31 (Editor: Bian Chun) Despite a recent selloff in gold, Goldman Sachs Group still maintains a bullish view on the precious metal and predicts that the gold price will return to an uptrend by the end of 2026.

In a latest research report, Goldman analysts Lina Thomas and Daan Struyven said that supported by ongoing gold purchases by central banks and the Federal Reserve expected to cut rates another two times this year, the medium-term outlook for gold remains solid, with the gold price expected to rise to $5,400 per ounce by year-end.

They said that in the short term, gold still faces “tactical downside risk.” If energy supply shocks intensify, the gold price could fall further to $3,800 per ounce. However, if the Iran war prompts investors to accelerate diversification away from “traditional Western assets,” there remains significant upside potential for gold.

Since the Iran-U.S. war broke out a month ago, the gold price has dropped 13%. Recently, weak stock markets have forced gold investors to close positions, and the market has also begun to factor in tighter monetary policy.

But Goldman analysts said this repricing has been “overdone,” reflecting that, compared with economic growth drag, the market has placed too much emphasis on inflation. They added that historically, concerns about growth will ultimately take center stage.

Goldman economists still insist on forecasting that the Federal Reserve will cut rates twice in 2026. The firm recently pushed its expectation for the Fed’s first rate cut from June to September, and expects the central bank to deliver the second rate cut in December this year.

The analysts also noted that concerns about some central banks selling gold to support their domestic currency exchange rates are unlikely to materialize. Gulf countries generally operate dollar-pegged exchange rate mechanisms, and if they need to intervene in the market, they are more likely to reduce holdings of U.S. Treasury securities.

Meanwhile, central bank demand remains a key support for the medium-term demand outlook. Goldman forecasts that central bank gold purchases may accelerate again, averaging about 60 tons of gold bought per month.

Federal Reserve Chair Jerome Powell said Monday that, amid energy shocks triggered by the Iran war between the U.S. and Iran, the Fed is inclined to keep interest rates unchanged and temporarily “ignore” the impact of this shock.

With Powell reigniting rate-cut expectations, international gold prices continued to rise on Tuesday. As of the time of publication, the gold price is close to $4,600 per ounce, far below the nearly $5,600 peak set at the end of January.

（China Financial News Bian Chun）