• Goldman Sachs (GS) reiterates that central-bank gold buying is a multiyear structural shift, not a temporary response to market turmoil.
  • Official-sector purchases continue, with 39 tonnes bought in August and 170 tonnes year-to-date, per World Gold Council data.
  • However, rising interest-rate expectations and profit-taking could still pressure gold prices despite central-bank accumulation.

Goldman Sachs has reaffirmed its view that central-bank demand for gold represents a structural shift in reserve management, providing long-term support for the metal even as short-term headwinds from rising interest rates persist. In a recent research commentary, analysts Lina Thomas and Daan Struyven argued that central banks are diversifying reserves to hedge geopolitical and financial risks, a trend that accelerated after the freezing of Russian assets in 2022. Goldman projects average central-bank purchases of 50 tonnes per month in 2026, nearly triple the pre-2022 average of 17 tonnes per month.

Official Buying Continues

The World Gold Council’s October 6 report showed net purchases of 39 tonnes in August, bringing the year-to-date total to 170 tonnes. China, Uzbekistan, and Poland led the buying in August. These figures, based on reported official data, underscore the persistent appetite for gold among reserve managers. “Central banks are increasingly focused on reserve security and diversification,” said a Goldman analyst, speaking on condition of anonymity. “Gold’s appeal as a hedge against geopolitical and financial risks is driving this multiyear trend.”

Rate Expectations Weigh on Prices

Despite the supportive backdrop from central banks, gold prices remain sensitive to interest-rate expectations. On October 19, spot gold edged up 0.2% to $4,171.65 an ounce, according to CNBC (CMCSA), as lower oil prices eased inflation concerns. However, expectations that the Federal Reserve could raise rates later this year kept a lid on gains. Markets are currently pricing a high probability of a December rate hike, which would increase the opportunity cost of holding non-yielding gold. “Higher bond yields can outweigh the supportive effect of central-bank buying in the short run,” noted Giovanni Staunovo, an analyst at UBS (UBS). “Incoming economic data will be crucial for gold’s direction.”

Volatility Risks Loom

Goldman also warned that options-related flows could amplify price swings. As investors use gold options to hedge policy uncertainty, dealer hedging around these contracts can exacerbate both rallies and sell-offs. This dynamic was evident in recent trading, where gold prices fluctuated sharply on shifting rate expectations. “The interplay between official-sector demand and private-investor positioning creates a complex price environment,” the Goldman analyst added.

For now, the structural case for gold remains intact, but the metal faces a tug-of-war between long-term demand and short-term macroeconomic pressures. Investors will be watching upcoming U.S. inflation and labor-market data, along with Fed guidance, for clues on the next move.

Correction: An earlier version of this article misstated the year-to-date central-bank purchases as 170 tonnes; the correct figure is 170 tonnes through August, based on World Gold Council data.