Goldman Sachs kept its end-2027 gold target at $5,400 per ounce in a Sept. 18 precious metals report, even after the Federal Reserve raised rates and Goldman economists projected another rate increase in October.
According to Zhuifeng Trading Desk, Goldman Sachs’ global commodities research team said tighter monetary policy would slow gold’s near-term ascent rather than end its long-running bull trend. The report said most of the immediate pressure from higher rates has already been absorbed by the market, leaving room for further upside.
Goldman leaves its terminal target unchanged
The bank said structural central-bank buying and call-option demand linked to concerns over fiscal sustainability in G10 countries are building a firm floor under gold prices.
Goldman estimated gold’s fair value at the end of this year at $4,650 per ounce, well above the current spot price of about $4,350. It also warned that dealer hedging activity in the options market could trigger a mechanical spike, or squeeze, and pointed to potentially sharp speculative swings around the U.S. midterm elections.
Rate hikes seen as slowing the path, not lowering the destination
In the report, Goldman said that although the Fed has delivered its first rate hike in three years and Goldman economists expect another move in October, its end-2027 target of $5,400 per ounce remains intact.
The bank’s reasoning is that tighter policy mainly affects the pace of gold’s appreciation in the near term, not the terminal price level. Goldman economists expect the Fed to deliver three rate cuts between September 2027 and March 2028, while keeping the terminal rate forecast unchanged at 3.25%-3.5%.
On that basis, Goldman lowered its end-2026 fair value forecast for gold to $4,650 per ounce from $4,900 previously. Even so, that level still sits above the current spot price of about $4,350. The report added that expected monetary tightening has already been absorbed to a large extent through ETF demand, which means the marginal drag from higher rates is weakening.
Central-bank buying remains the core structural driver
Goldman described continued central-bank purchases as the main structural force behind its bullish gold view, accounting for most of the roughly 23% upside it expects by the end of 2027.
Its real-time central-bank buying tracker, the Nowcast model, shows purchases running at about 91 tonnes per month on a seasonally adjusted three-month average basis. That is more than five times the pre-2022 historical average of 17 tonnes per month.
Based on that acceleration, Goldman raised its assumptions for central-bank demand:
- Previous forecast: 50 tonnes per month in 2026 and 40 tonnes per month in 2027
- Latest forecast: an average of 60 tonnes per month across 2026 and 2027
Goldman said the reserve diversification push that followed the freezing of Russian central-bank assets in 2022 represents a structural shift rather than a cyclical one. The bank added that recent conversations with multiple central banks supported its view of sustained strong demand for gold.
Call-option demand stays resilient
The report also focused on the gold call-options market. Open interest in gold call options is now about three times the historical average, and that positioning has remained unusually resilient even after the Fed’s rate hike and a relatively hawkish press conference.
Goldman said this reflects continued demand for gold as a macro policy hedge, driven by concerns over fiscal sustainability in G10 economies.
Its $5,400 target assumes current call-option positioning remains broadly stable, with GLD net call open interest at about 2.3 million contracts. The bank said its base-case forecast does not include any additional price amplification from a further build-up in call-option positions.
Goldman estimated that at the current open-interest level of roughly 2.3 million contracts, every additional 100 tonnes of conviction demand would lift gold by about 6.8%. Under normal positioning conditions, the same figure would be only about 2%. That suggests market-maker hedging could mechanically magnify gains and push prices well beyond Goldman’s base-case forecast.
Two tail-risk scenarios
The report highlighted two scenarios that could trigger a pullback or sharp volatility.
An extremely hawkish path
If the Fed were to deliver three additional hikes before year-end and signal a higher terminal rate, doubts about the independence of developed-market central banks could fade, leading to partial unwinding of macro-hedge demand.
Combined with net selling by rate-sensitive ETF holders, gold could briefly fall to around $4,070 per ounce, Goldman said. Even in that case, the bank expects continued central-bank buying to keep lifting the floor, with prices gradually recovering to about $4,200 per ounce by the end of 2026.
Event-driven swings around the U.S. midterm elections
Goldman said speculative capital often treats gold as a waiting-room asset ahead of major events with uncertain outcomes.
Before the U.S. midterm elections, speculative positioning could temporarily lift gold by about 5%, based on an assumption that net managed-fund positions rise by roughly 250 tonnes from current levels to 685 tonnes, the 90th percentile since 2014.
Once the election result is known and capital is redeployed, however, gold could face sharp selling. Goldman said similar moves were seen after the 2016 Brexit vote and the 2024 U.S. presidential election.