Gold After the Price Drop: Why Goldman Sachs Maintains its $4,900 Forecast

The gold market has demonstrated within a few weeks how quickly expectations can change. As recently as spring, record highs and inflation concerns dominated the headlines. By the end of June, however, the focus shifted to whether the significant decline could mark the end of the long-term gold bull market.

Goldman Sachs arrives at a different assessment. While the US investment bank sees short-term pressure from high interest rates, a periodically strong US dollar, and declining inflows into exchange-traded gold products, it maintains its forecast of $4,900 per troy ounce by the end of 2026. From the analysts' perspective, the structural demand from central banks and other state actors is more decisive than the movements of individual trading days.

Gold Price Recovers After a Difficult Quarter

On June 30, 2026, the gold price was temporarily quoted at around $4,027 per troy ounce. This put the precious metal on track for its sharpest quarterly loss since 2013. In June alone, the decline at that point amounted to 11.2 percent. Persistent inflation risks and the expectation that the US Federal Reserve could maintain its restrictive monetary policy for longer or even raise interest rates again were considered the main burdening factors.

Just two days later, it became clear how quickly the market picture can shift again. On July 2, the spot price rose by 2.4 percent to around $4,127. The trigger was weaker US labor market data: in June, only 57,000 new non-farm jobs were created, while economists had expected 110,000. Simultaneously, the dollar index lost about 0.7 percent. The market-implied probability of a US interest rate hike by September fell from 66 to approximately 51 percent.

This movement provides no guarantee of a lasting recovery. However, it illustrates that the gold price is currently reacting strongly to interest rate, inflation, and economic expectations.

The Common Misconception: A Sharp Decline Automatically Ends the Trend

A price decline of several hundred US dollars initially appears to be a fundamental change in direction. In fact, such movements can have various causes. In addition to sales by long-term investors, futures market positions, currency fluctuations, liquidity needs, and short-term interest rate bets influence the price.

Gold yields neither interest nor dividends. When yields on safe government bonds rise, the so-called opportunity costs of holding gold increase. A strong dollar can further weigh on the precious metal because gold becomes more expensive for buyers outside the dollar zone.

These mechanisms explain the short-term headwinds. However, they do not yet answer the question of whether long-term demand for gold has changed. This is precisely where Goldman Sachs' assessment comes in.

Why Goldman Sachs Continues to Expect $4,900

The forecast of $4,900 per troy ounce is primarily based on the assumption that emerging markets will continue to diversify their foreign exchange reserves. Following the freezing of Russian foreign exchange reserves in 2022, the yield of a reserve instrument is no longer the sole decisive factor for many central banks. Political availability, place of custody, and independence from a single currency area also play a larger role.

Goldman Sachs describes this state demand as the structural anchor of the forecast. According to the bank, short-term pressures from monetary policy could ease over time. Additionally, private investors could give gold greater consideration again if concerns about national debt, currency stability, or geopolitical risks increase.

Viewed from the gold price on July 2, the price target of $4,900 would correspond to a calculated potential of nearly 19 percent. However, this is a forecast and not a fixed price scenario. Exchange rates, interest rate decisions, and political developments can significantly influence actual performance.

Central Banks Remain a Decisive Demand Driver

The latest central bank survey by the World Gold Council supports the thesis of sustained state demand. For the survey, 76 central banks were interviewed – more than ever before since the start of the annual survey.

89 percent of respondents expect global central bank gold reserves to increase within the next twelve months. A record 45 percent also plan to increase their own institution's holdings. Only one percent expects their own holdings to decrease.

Actual purchases are also trending upward again. According to the World Gold Council, officially reported gold reserves increased by a net 41 tonnes in May.

What is Becoming Particularly Important for the Gold Price Now

In the short term, monetary policy remains the most important driver. Weaker economic data can reduce the probability of further interest rate hikes and thus support gold. At the same time, rising energy prices or higher inflation expectations could force central banks into a more restrictive course.

The US dollar also remains crucial. A falling dollar makes it easier for buyers from the Eurozone and other currency areas to access the international gold market. Conversely, a renewed dollar upswing could slow down the recovery.

In addition, there is the geopolitical situation. Gold does not automatically react to every crisis with rising prices. Escalations can trigger safe-haven buying as well as increase inflation and capital market interest rates. The effect therefore depends on which factor is weighted more heavily by the market.

Physical Gold Follows a Different Logic Than the Short-Term Chart

For long-term investors, the stock market price is only part of the consideration. With physical gold, availability, premiums, denominations, storage, and the actual delivery time are also factors.

A falling spot price therefore does not necessarily mean that popular bars and coins are immediately cheaper or infinitely available to the same extent. Conversely, a rising quote alone is not yet a reason for hasty decisions.

At spar.gold, a clear principle therefore applies: only physically available goods are offered. Price is a signal – physical availability is reality.

Conclusion: Volatility is Not to Be Equated with a Fundamental Break

The sharp decline in the gold price until the end of June was real and significant for short-term market participants. However, the rapid recovery following the weaker US labor market data shows how strongly the quote is currently shaped by changing interest rate expectations.

Goldman Sachs' long-term argument is not based on a linear price development. It relies primarily on the ongoing diversification of central banks, geopolitical uncertainty, and possible doubts about the long-term sustainability of high national debt.

Whether the gold price reaches the target of $4,900 remains to be seen. However, current data shows that structural demand from the official sector has not disappeared despite the recent correction. A volatile price and a long-term intact demand theme can exist simultaneously.

Stay farsighted

Yours, Helge Peter Ippensen