Gold prices: 2 upside risks to Goldman Sachs target on 'highest-conviction' long commodity

Gold rate has surged past its second quarter range of $3,200–3,450 per troy ounce in the international market, rallying 14 per cent since August 26 to around $3,865 per troy ounce, marking a 47 per cent gain year-to-date. Goldman Sachs said the breakout largely reflected three key drivers from its gold price framework: rapidly rising Western ETF holdings, likely re-acceleration in central bank purchases following the summer lull, and, to a lesser extent, stronger speculative positioning.

The brokerage highlighted two factors that could push gold prices above its $4,000/toz mid-2026 and $4,300/toz December 2026 forecasts. First, speculative positioning, which typically drives short-term volatility around the fair value set by ETFs and central banks, accounted for only about 1 percentage point of the recent 14 per cent rally and has remained stable over the past three weeks. 

Second, Western ETF holdings jumped by 109 tonnes in September, well above the 17 tonnes predicted by Goldman’s model, signaling that private investors are increasingly diversifying into gold—a key upside risk the bank has been flagging.

Goldman noted that the Western gold ETF market remains relatively small, worth only around 1.25 per cent of privately held US Treasuries, meaning even modest additional diversification from developed market fixed income could drive further price gains.

The investment bank maintained gold as its “highest-conviction” long commodity, citing structurally higher central bank demand, potential private sector diversification, and strong portfolio hedging properties in downside scenarios such as global growth slowdowns or rising concerns over developed market macro policy.