Despite recent selling pressure on gold, Goldman Sachs Group maintains its bullish outlook, forecasting a return to price appreciation by the end of 2026. Analysts Rina Thomas and Dan Struven noted in a report that the medium-term prospects for gold remain solid, with prices potentially reaching $5,400 per ounce, driven by continued purchases by central banks and expectations of two additional U.S. interest rate cuts this year.

They indicated that gold still faces near-term "tactical downside risks," and prices could fall to $3,800 per ounce if energy supply disruptions worsen. Nevertheless, significant upside potential remains if geopolitical tensions prompt nations to accelerate diversification away from traditional Western assets.

Since the onset of hostilities a month ago, gold prices have declined 13%, as falling equity markets forced investor liquidation and markets began pricing in monetary tightening. However, the analysts suggested this repricing has been excessive, reflecting an overemphasis on inflation dynamics while overlooking growth concerns. Historical trends indicate that growth worries eventually take precedence.

Concerns that some central banks might sell gold to support their currencies are unlikely to materialize, according to the analysts. Gulf countries are more likely to intervene by selling U.S. Treasuries, given their typical dollar-pegged exchange rate regimes.

Assuming no additional private-sector investment, the analysts expect medium-term price volatility to moderate, which could lead to a renewed acceleration in official sector purchases, estimated at an average of around 60 tons per month.