Goldman Sachs delivers honest verdict on gold’s selloff

Gold investors were bracing for more sluggishness.

Following months of pressure, investors expected the next big call on the shiny yellow metal to be much more defensive, especially as rate-cut hopes faded and the dollar regained some bite. 

For context, gold was recently trading near the low $4,000s, with spot prices at around $4,064 per ounce at the time of writing. 

Gold price rebounded amid weak jobs data, lower oil prices, and Fed Chair Kevin Warsh’s latest comments. 

Speaking in Portugal, according to Investopedia, Warsh said inflation risks were diminishing somewhat. While it was far from a clear signal of a rate cut, the comments gave gold a short-term lift and injected life back into the debasement trade.

Nevertheless, Goldman Sachs isn’t treating the recent pullback as the end of the gold trade.

The bank’s latest message is much more measured but adds to the bull case for higher gold prices.

Goldman was focusing on a deeper source of demand that does not move like a short-term ETF trade.

Though gold has lost momentum, Goldman says the bigger force behind the rally remains intact.

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Wall Street price targets for gold prices

• Goldman Sachs: $4,900/oz by end-2026. Goldman’s leans on sovereign demand and emerging-market central bank diversification.
• JPMorgan: $6,000/oz by Q4 2026. JPMorgan sees gold pushing higher as central bank demand and macro uncertainty remain supportive.
• UBS: $5,200/oz over the next 12 months. UBS says gold can rebound as markets rethink Fed policy, dollar pressure, and central bank buying.
• Morgan Stanley: $5,200/oz in H2 2026. Morgan Stanley says gold needs stronger ETF inflows to make that target realistic.
• Bank of America: $4,800/oz by Q4 2026. BofA trimmed its near-term outlook as investor demand weakened and Fed headwinds grew.
  Sources: Reuters, Kitco News, Business Insider, Investing, JPMorgan Global Research, and Morgan Stanley/Bank of America notes cited by Kitco. 

What Goldman Sachs said about gold’s next move

Goldman Sachs just drew a clear line between gold’s pullback and its long-term thesis.

Samantha Dart, co-head of global commodities research at Goldman Sachs, argued that gold’s sharp four-month decline doesn’t mean the bull case is wrapped up and that she still sees room for the metal to climb toward its $4,900/oz end-2026 forecast, according to Kitco News.

Gold had been one of Wall Street’s strongest momentum stories, stoked by inflation fears, central-bank buying, and geopolitical risk. The setup then took a major blow amid higher-rate expectations; a stronger dollar and softer ETF demand weighed on prices.

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Goldman’s point is that the primary structural buyer hasn’t disappeared.

Dart acknowledged that a hawkish Fed has hurt the debasement trade and pressured ETF demand. But Goldman is still leaning on central-bank buying, especially emerging-market reserve diversification, anchoring its forecast.

She wrote that “EM central bank diversification” remains the key driver, with the post-2022 freezing of Russia’s reserves influencing how some central banks think about gold.

The World Gold Council data supports that argument. 

The 2026 Central Bank Gold Reserves Survey found that 89% of respondents expect global central bank gold reserves to rise over the next 12 months, while a record 45% expect their own institutions to increase their holdings.

It’s important to note that in May, according to Yahoo Finance, Goldman revised their central-bank gold-demand model after finding official trade data was missing some sovereign buying. 

Consequently, its 12-month purchase forecast jumped to nearly 50 tonnes per month from 29 tonnes per month, and the bank now sees roughly 60 tonnes per month through 2026.

Goldman said UK trade data understated London vault outflows since August 2025, while geopolitical uncertainty and diversification demand kept underlying interest strong. 

The bank had slashed its $5,400/oz year-end 2026 target by $500 to $4,900 in June, citing the reality of a hawkish Fed.

What has to happen for gold to reach $4,900

For gold to reach Goldman’s $4,900/oz target, the market needs a lot more than sovereign buying. It needs pressure from rates, the dollar, and investor flows to ease simultaneously.

The first gate is U.S. labor data. 

Reuters reported June payrolls rose just 57,000, well below the 110,000 economists expected, while May was revised down to 129,000 from 172,000. That sort of slowdown could help gold if it reduces market confidence that the Fed has to stay hawkish.

The second aspect to consider is policy language.

According to MoneyControl, Fed Chair Kevin Warsh helped gold rebound by saying inflation risks had eased, but he also reaffirmed the Fed’s 2% target and warned against assuming looser policy. 

That means gold needs cooler inflation and softer jobs data to become a trend rather than a one-day reaction.

The third point to consider is the return of private money. The World Gold Council said global gold ETF flows slowed to a “trickle” in May, with ETF assets down 2% month over month to $604 billion. 

Without stronger ETF demand, gold may recover, but the move toward $4,900 becomes harder to sustain.

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