Goldman Sachs Raises Year-End Gold Price Target to $3,300 on Central Bank Demand

Goldman Sachs has raised its year-end gold price target to $3,300 per ounce, citing unexpectedly high demand from central banks and exchange-traded funds (ETFs). The investment bank noted that recent ETF inflows have been stronger than anticipated, reflecting increased investor demand for safe-haven assets. Additionally, Goldman Sachs expects that major Asian central banks will continue to rapidly accumulate gold over the next 3-6 years, with countries like China potentially increasing their gold reserves from the current 8% to 20-30% of their total reserves.

Goldman Sachs analysts Lina Thomas and Daan Struyven released a report on March 26, adjusting their 2025 year-end gold price forecast from $3,100 to $3,300 per ounce, with a revised range of $3,250 to $3,520. This adjustment comes as gold prices recently surpassed $3,000 per ounce, driven by factors such as speculation around potential U.S. tariffs on the European Union and market attention to the so-called "Mar-a-Lago Agreement" framework, which has led to a rebound in speculative holdings.

Goldman Sachs highlighted that the strong ETF inflows and central bank buying have exceeded expectations, continuing to support higher gold prices. The bank also pointed out that in extreme risk scenarios, gold prices could surpass $4,200 per ounce. While a potential peace agreement between Russia and Ukraine or a significant stock market decline could lead to short-term selling pressure due to margin-driven liquidations, this could present more attractive entry points for investors.

Goldman Sachs emphasized that the rapid pace of central bank gold purchases is likely to continue for the next three years, driven by the increased demand for asset safety following the freezing of Russian central bank assets. The bank noted that emerging market central banks, which have lower gold reserve ratios compared to developed markets, have significant room to increase their gold holdings. For instance, China's central bank currently holds around 8% of its reserves in gold, compared to around 70% for countries like the United States, Germany, France, and Italy, and a global average of about 20%. Goldman Sachs considers a 20% gold reserve ratio to be a reasonable medium-term target for large emerging market central banks.

If China's central bank aims to increase its gold reserve ratio to 20% while maintaining a monthly purchase rate of approximately 40 tons, it would take about three years to reach this target. If the target is raised to 30%, it would take around six years. Goldman Sachs also noted that even if Russian assets were unfrozen, central banks would likely continue to accumulate gold due to the changed perception of asset safety and the strategic interests of countries like China, which is the largest gold buyer and unlikely to alter its diversification strategy due to improved U.S.-Russia relations.

In summary, Goldman Sachs' revised gold price target reflects the bank's view that both ETF inflows and central bank demand are likely to remain robust, supporting higher gold prices in the coming years. The bank's analysis suggests that while there are potential downside risks, such as a peace agreement between Russia and Ukraine or a significant stock market decline, these factors are unlikely to fundamentally alter the structural demand for gold. As a result, Goldman Sachs maintains a bullish outlook on gold prices, with a year-end target of $3,300 per ounce and a potential for prices to exceed $4,200 in extreme risk scenarios.