FX.co ★ Goldman Sachs: central banks to power gold rally despite Fed tightening

The Federal Reserve’s tightening will only slow, but not halt, the global gold rush. According to Goldman Sachs analysts, investors should not panic over the Fed’s rate hike in September and a likely similar move in October. The bank kept its long‑term forecast unchanged: gold could trade at $5,400 per troy ounce by the end of 2027.

Analyst Lina Thomas acknowledged that high interest rates are temporarily cooling demand from ETFs. As a result, the bank had to modestly cut its fair value estimate from $4,900 to $4,650 per ounce for the end of this year. That is still well above current spot levels around $4,350. Goldman Sachs is confident that the Federal Reserve will relent and cut interest rates three times from September 2027, so the overall bull trend for the precious metal remains unchanged.

The main sponsor of the future gold rally is central banks around the world, which are largely ignoring the rhetoric of the US regulator. Analysts estimate that major central banks are buying gold at a frightening pace — about 91 tonnes per month versus a historical norm of 17 tonnes before 2022. This insatiable official demand should deliver a final gain of about 23% and fully offset any market negatives.

Investors continue to use gold call options actively as insurance against macroeconomic catastrophes, leaving room for even more vigorous price gains. However, Goldman Sachs offers a small caveat for pessimists: if the Federal Reserve suddenly shows uncommon toughness, the market could face a very painful and sharp correction.