Goldman Sachs kept its year-end Gold target at $5,400, while Gold traded near $4,500. Gold hit a record of about $5,600 per troy ounce in late January, then consolidated after a sharp sell-off in March.
The bank expects central bank buying to rise in 2026 and to support prices later in the year. It estimates purchases will average 60 tonnes a month this year, above the 12-month moving average of 50 tonnes seen in March.
Near Term Headwinds For Gold
Gold’s near-term outlook is described as weak due to higher global bond yields and rising inflation expectations. The note also says Gold can be used as a source of cash if market conditions tighten.
World Gold Council data shows the People’s Bank of China bought 8 tonnes in April, the highest level since December 2024. Gold is about 9% of China’s foreign exchange reserves.
In Q1, global central banks bought 244 tonnes of Gold, up 3% year on year. The same data also shows more selling activity from some countries during the quarter.
The short-term outlook for gold appears weak, as the precious metal has been consolidating around the $4,500 level since the sharp sell-off in March. Rising global bond yields, with the U.S. 10-year Treasury note recently hitting 4.8%, are making non-yielding assets like gold less attractive for now. This environment suggests caution for traders holding short-term positions.
Positioning For The Next Move
Traders should also be aware that gold could be used as a source of cash if equity markets become more volatile. With the S&P 500 showing signs of choppiness in recent weeks, a significant downturn could trigger liquidity-driven selling in the gold market. This presents a potential downside risk in the immediate future.
Despite this, the underlying support for gold remains strong due to significant institutional demand. Global central banks purchased 244 tonnes in the first quarter of this year, which is a 3% increase over the same period in 2025. This robust buying is expected to create a solid price floor.
The People’s Bank of China continues to be a key buyer, adding another 8 tonnes in April and bringing its total gold holdings to approximately 9% of its foreign exchange reserves. This buying continues a broader de-dollarization trend we saw accelerate throughout 2025 among several emerging market central banks. Such persistent demand is a powerful long-term bullish signal.
This disconnect between short-term weakness and long-term strength suggests a strategy for options traders. One could consider buying call options with expiration dates late in the fourth quarter to capitalize on the expected year-end rally. Meanwhile, be prepared for potential price dips in the coming weeks, which could present better entry points.
The long-term price target of $5,400 by year-end remains a key focal point. This is reminiscent of the consolidation we observed in late 2025 before the rally that pushed prices to a record high near $5,600 in January. The current market dynamic suggests a similar pattern may be unfolding, with central bank buying serving as the primary catalyst for the next move higher.
