For decades, gold followed a familiar rhythm. Prices rose when fear spiked, fell when calm returned. When gold rallied too far, supply or selling pressure would bring it back down.
That framework is now breaking.
According to a Goldman Sachs report released Thursday, gold has entered a new phase. Private-sector buyers — not just central banks — are becoming a structural force in price formation.
For that reason, the investment bank lifted its December 2026 gold forecast from $4,900 to $5,400 an ounce. This implies there may still be roughly 15% upside ahead — even after the metal’s blockbuster 64% surge in 2025.
What’s Behind Goldman’s Bold $5,400 Gold Call?
Central banks still matter, and Goldman expects emerging-market reserve managers to continue adding gold at an elevated pace in 2026.
But the acceleration in prices since 2025 reflects something new: private capital treating gold as a long-term hedge against global policy risk, rather than a cyclical trade.
"Private sector diversification into gold has started to realize," analyst Daan Struyven said.
The shift matters because it changes how the gold market behaves after rallies.
According to the report, "private sector diversification buyers, whose purchases hedge global policy risks and have driven the upside surprise to our price forecast, don't liquidate their gold holdings in 2026, effectively lifting the starting point of our price forecast."
This demand is showing up in several ways. Western gold ETFs – such as the SPDR Gold Shares (NYSE:GLD) or the iShares Gold Trust (NYSE:IAU) – have attracted substantial inflows since rate cuts began, exceeding what simple rate-based models would predict.
More importantly, Goldman highlights growing demand through harder-to-measure channels: physical purchases by high-net-worth families, increased use of gold-linked structures, and heavy call-option buying that mechanically reinforces upside momentum through dealer hedging.
These flows are not easily reversed. Unlike election-related hedges or short-term speculative positioning, they are tied to broader concerns about fiscal sustainability, monetary credibility, currency debasement, and geopolitical fragmentation.
That makes them structurally different — and far more persistent.
“The perception of these macro policy risks appears stickier,” Struyven said.
Why Gold Market’s ‘Old Rules’ No Longer Work
"In commodities, the usual maxim that ‘high prices cure high prices' does not apply to gold," the expert wrote.
In most commodity markets, higher prices eventually slow demand or bring on more supply, pulling prices back down.
Yet, gold doesn’t work that way.
According to Goldman Sachs, annual mine output accounts for roughly 1% of the total above-ground gold stock, leaving little room for production to surge even after sharp rallies.
As a result, gold rallies tend to end only when demand falls — not when prices rise.
Struyven assumes that demand tied to global macro policy risks will remain intact through next year.
If those hedges stay in place, the portion of gold's recent gains that can't be explained by traditional flow models does not unwind.
If those hedges remain, the part of gold's rally that can't be explained by traditional models doesn't reverse. In that case, today's prices aren't seen as stretched.
They become the new baseline.
“We see the risks to our upgraded $5,400/toz forecast as as two-sided but still significantly skewed to the upside because private sector investors may diversify further on lingering global policy uncertainty,” Struyven said.
What Could End The Rally?
For prices to fall meaningfully, the firm argues, something fundamental would have to change on the demand side.
A sharp and credible reduction in perceived fiscal or monetary risks could prompt private investors to unwind macro hedges, removing a key pillar of support.
“On the private sector demand side, Fed rate hikes could reduce gold demand both via the traditional opportunity cost channel, and by easing investor concerns about global central bank independence,” Struyven said.
On the official side, a sustained decline in central bank buying back toward pre-2022 levels would also signal a shift in the market's structure.
Absent those developments, Goldman's analysts suggest gold may continue to defy the playbook that governs most commodities, not because prices are rising, but because the reasons for owning the metal have yet to fade.
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