Gold price plunges from 3-month high...Goldman Sachs: "$4,900 possible by year-end"

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Although the price of gold fell by 5.5% from its 3-month high, Goldman Sachs maintained its year-end forecast of $4,900.

According to BeInCrypto on September 1 (local time), the price of gold fell by 5.5% from its 3-month high of $4,697 recorded on August 25. The price at the time of writing was around $4,436. It also fell below the 200-day moving average of approximately $4,529. Barchart pointed out that gold prices closed below the 200-day moving average several times for the first time since early June.

On Monday, the price of gold briefly dropped below $4,400, marking its lowest level since August 19. The recent decline was attributed to the possibility of interest rate hikes by the Federal Reserve (Fed). Gold does not pay interest, so its investment appeal may decrease as interest rates rise. Barchart noted that in the past, when gold prices closed below the 200-day moving average multiple times, there was an instance where SPDR Gold Shares (GLD) entered a technical correction. However, this was only a single instance.

Goldman Sachs Research reconfirmed its year-end 2026 gold price target of $4,900 in an August 28 report. This is approximately 10% higher than the price at the time of writing. Goldman Sachs lowered its year-end target by $500 in June when expectations for interest rate cuts within the year weakened, but it maintained the outlook for further gains.

Lina Thomas, Goldman Sachs' senior commodities analyst, and Daan Struyven, co-head of global commodities research, cited central bank purchases as a key reason. They stated, “We expect high levels of gold purchases to continue over several years as central banks diversify their reserve assets in preparation for geopolitical and financial risks.” Goldman Sachs forecasts central bank gold purchases to average 50 tons per month in 2026, roughly three times higher than the average of 17 tons per month before 2022.

The opposing scenario is also clear. Goldman Sachs projected in June that if the Fed raises interest rates, gold prices could fall to $4,400 by year-end. Fidelity estimated the fair price of gold to be approximately $5,000 based on global M2 money supply. With gold prices falling below the 200-day moving average, strong central bank purchases and the Fed's interest rate path have emerged as key variables that will determine the year-end price.

[Article Summary]

-Gold price fell by 5.5% from $4,697 on August 25, dropping below the 200-day moving average.

-Goldman Sachs maintained its year-end 2026 target of $4,900, citing central bank purchases of 50 tons per month.

-A downside scenario was also presented, suggesting that if the Fed raises interest rates, gold prices could fall to $4,400 by year-end.

*Disclaimer: This article is for investment reference only, and we are not responsible for investment losses based on it. The content should be interpreted for informational purposes only.*