Gold prices remain under pressure from elevated US bond yields, but Goldman Sachs believes robust central bank demand should prevent any sustained sell-off, providing a solid floor for the precious metal despite near-term headwinds.
Despite the recent pullback, Goldman Sachs remains constructive on the longer-term outlook, arguing that official sector buying continues to underpin the market.
Goldman Sachs notes that central banks purchased another 31 tonnes of gold in May, well above the long-run monthly average and consistent with the steady accumulation seen over the past three years.
The bank believes official-sector demand has fundamentally changed the gold market by reducing the likelihood of deep and prolonged corrections.
Goldman Sachs acknowledges that higher real interest rates could continue to generate temporary selling pressure, particularly through exchange-traded funds and speculative positioning.
The bank argues that while higher yields have historically weighed on gold, central bank buying is now providing an increasingly important offset.
Near-Term Gold Price Forecast: Goldman Sachs Still Sees Longer-Term Upside
Goldman Sachs expects near-term volatility to persist while markets assess the outlook for US interest rates.
However, the bank believes any weakness driven by higher yields should prove temporary because central bank demand remains exceptionally strong.
“We expect continued robust official-sector buying to underpin prices.”
For gold investors, Goldman Sachs argues that the current environment differs markedly from previous periods of rising yields, with central bank diversification creating a durable source of demand that should continue to support gold over the medium term.
