Goldman Sachs Research recently projected that gold prices will rise to $4,900 per ounce by the end of 2026, driven by strong demand from central banks seeking to diversify their foreign exchange reserves.
Zhitong Finance APP reports that the World Gold Council released a report stating that global gold ETFs saw net inflows of $18 billion in August. Total assets under management surged 16% from the previous month to $615 billion, while holdings increased by 121 tonnes to 4,189 tonnes, setting a new historical high. North America and Europe together accounted for approximately 90% of global inflows, with Europe recording its strongest monthly performance on record and North America posting the third-largest monthly inflow in history.
European gold ETFs attracted $7.9 billion in inflows in August. In addition to concerns about fiscal sustainability shared with the North American market, European investors continue to face pressure from high sovereign debt borrowing costs, further highlighting gold's role as a portfolio diversification tool and an alternative asset to sovereign bonds.
The report pointed out that policy concerns triggered by U.S. intervention in foreign exchange markets to support the yen, ongoing worries about fiscal sustainability amid sustained pressure on the U.S. Treasury market, and renewed risks of U.S. dollar depreciation collectively accelerated investors' allocation to gold. Meanwhile, gold prices broke through key technical levels, further strengthening market momentum and attracting more tactical and institutional capital.
Long-term buying by central banks has established a solid floor for gold prices. Global central banks purchased a net 289 tonnes of gold in the second quarter, a significant year-on-year increase of 62%. The People's Bank of China increased its gold reserves for the 22nd consecutive month. By the end of August, China's gold reserves reached 76.73 million ounces, an increase of 650,000 ounces from the previous month, marking the highest monthly increase since October 2023. Amid the global trend of "de-dollarization," asset diversification and a gradual reduction in reliance on U.S. dollar-denominated assets are likely to become the primary direction for future central bank asset allocation.
Goldman Sachs Research recently projected that, driven by strong demand from central banks seeking to diversify their foreign exchange reserves, gold prices will rise to $4,900 per ounce by the end of 2026. Goldman Sachs analysts also noted that demand for gold call options is rising as investors use them to hedge portfolios against potential major shifts in government policies, which could amplify two-way price volatility.
Qu Rui, Senior Deputy Director of the Research and Development Department at Dongfang Jincheng, stated that current gold price trends depend on U.S. inflation data for August and the Federal Reserve's interest rate decision meeting in September. If core CPI continues to decline, the probability of the Fed holding rates steady in September will rise significantly, potentially allowing gold prices to break through the resistance level of $4,600 per ounce. If inflation data rebounds or remains flat month-on-month, the probability of a 25-basis-point rate hike in September will increase, possibly causing gold prices to retreat to around $4,300 per ounce.
Looking ahead, the World Gold Council believes that U.S. fiscal and debt issues remain important support for gold. If government intervention in the bond market alleviates financing pressures, the rise in gold prices may be temporarily suppressed. However, if the market perceives such intervention as a sign of intensifying fiscal pressure, factors such as falling real yields and a weaker U.S. dollar could further push gold prices higher. In the absence of credible fiscal consolidation plans, gold may continue to benefit from investor concerns regarding debt and fiscal sustainability.
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