Precious Comment: Strong Central Bank Buying in May Provides Price Floor Amidst Likely Temporary Rates Pressure

Research evidence excerpt

Precious Comment: Strong Central Bank Buying in May Provides Price Floor Amidst Likely Temporary Rates Pressure

Goldman Sachs Precious Comment

with recent survey evidence. The 2026 OMFIF survey1 suggests that while diversification

remains the most commonly cited reason for gold purchases among reserve managers,

protection against geopolitical risk was selected by 51% of respondents, up 11pp from

2024. With 79% of reserve managers believing the global monetary system is

transitioning toward a more multipolar structure — leading to greater geopolitical

fragmentation —, uncertainty over the international monetary system remains another

key factor in favor of gold purchases. We maintain our assumption of average monthly

central bank buying of 50 tonnes in 2026 and 40t/month in 2027. As in prior years, we

expect central bank gold purchases to slow over the summer before reaccelerating from

September.

Structurally, EM central bank diversification—following the 2022 freezing of Russia’s

reserves—remains the anchor of our $4,900/toz end‑2026 forecast. Cyclically, however,

gold faces near term headwinds from the potential hit to gold demand for macro policy

hedges (as a hawkish Fed helps fade the debasement theme) and as markets are pricing

in a Fed hike this year amid inflation concerns (Exhibit 3), weighing on rate-sensitive ETF

demand.

Exhibit 3: Gold Continues to Face Near‑Term Headwinds, as Markets Are Pricing in Fed Hikes

Amid Energy‑Driven Inflation,

Source: Bloomberg, LBMA, Goldman Sachs Global Investment Research

We expect the Fed-related headwind to reverse over time, as our economists continue

to see no rate hikes, but an ongoing and delayed easing cycle in 2027. Over the medium

term, risks to our forecast remain skewed to the upside.