Gold could extend its rally and touch $4,900 (₹4.68 lakh, at ₹95.43 per dollar) per troy ounce by the end of 2026, according to Goldman Sachs Research, with sustained central bank purchases emerging as the key structural support for prices. However, the investment bank has warned that gold could see sharper swings if expectations of US Federal Reserve rate hikes return.
The forecast comes after a highly volatile run for the yellow metal this year. Gold has already climbed sharply from its July lows, but prices fell more than 3 percent on Friday after US Federal Reserve Chair Kevin Warsh struck a cautious note on inflation at the Jackson Hole symposium.
Gold was trading around $4,550 (₹4.34 lakh) an ounce before the latest correction, putting Goldman Sachs’ year-end target at roughly 8 percent above those levels.
Goldman Sachs sees continued purchases by central banks as the most important factor supporting gold over the longer term.
Central banks have increasingly turned to gold to diversify their foreign exchange reserves and reduce exposure to assets that could be vulnerable to geopolitical or financial restrictions.
The shift accelerated after Western countries froze Russian central bank assets following Russia’s invasion of Ukraine in 2022.
Key points from Goldman Sachs include:
Central banks could buy an average of 50 tonnes of gold a month in 2026.
The average monthly purchase before 2022 was only around 17 tonnes.
Central bank buying accelerated to about 100 tonnes in June on a three-month seasonally adjusted basis, from 66 tonnes in May.
China was the largest identifiable central bank buyer in June.
Goldman analysts Lina Thomas and Daan Struyven expect elevated central bank accumulation to remain a multi-year trend as countries seek protection against geopolitical and financial risks.
Gold has witnessed exceptional volatility in 2026. The precious metal hit a record high of around $5,600 (₹5.35 lakh) an ounce on January 29 before falling below $4,000 (₹3.82 lakh) by mid-July. It has since staged a strong recovery, gaining nearly 15 percent from the July lows.
Goldman Sachs expects the recovery to continue, although its latest $4,900 (₹4.68 lakh) target is lower than its earlier forecast.
Interest rates remain a major variable for gold. Higher US interest rates generally make non-yielding assets such as gold less attractive, while expectations of lower rates tend to support the metal.
Goldman Sachs expects this headwind to ease, with its economists forecasting a lower inflation trend that could allow the Fed to remain on hold this year.
However, the recent comments from Warsh have revived concerns over inflation and the possibility of higher rates. This could keep gold prices volatile in the near term.
Goldman Sachs believes its $4,900 (₹4.68 lakh) target could be exceeded if private investment demand strengthens.
A revival in gold-backed exchange-traded fund (ETF) inflows, particularly while the Fed remains on hold, could push prices significantly higher.
At the same time, the bank warns that renewed expectations of Fed rate hikes could trigger a sharper correction as traders unwind hedges.
For Indian investors, therefore, the outlook will depend not only on global gold prices but also on the rupee-dollar exchange rate. A weaker rupee can amplify the impact of a rise in international gold prices on domestic prices.
Dollar conversions are based on the August 29, 2026 USD/INR mid-market rate of about ₹95.43 per dollar.