Goldman Sachs thought it knew how much gold central banks were buying. It was wrong by more than 70%. And the correction to that model has significant implications for where gold prices are heading in the second half of 2026.
Goldman analysts Lina Thomas and Daan Struyven published a note on May 18 that addresses both the data gap and what it means for the bank’s $5,400 year-end price target.
The gold data revision that changed Goldman’s central bank model
Goldman’s nowcast of monthly central bank gold purchases for March 2026 was revised upward to approximately 50 tonnes per month, from a prior estimate of approximately 29 tonnes, according to Exchange Rates UK. That is an upward revision of more than 72%, driven not by new buying activity but by the identification of a structural gap in the bank’s data sourcing.
Goldman determined that since August 2025, UK trade data had been systematically failing to capture gold leaving London’s vault network, meaning the bank’s model had been undercounting sovereign purchases for roughly eight months.
“We are updating our GS nowcast of central bank gold purchases because, since August 2025, it has become too systematically underpredictive,” the analysts wrote, according to Investing.com.
April buying is now estimated at roughly 80 tonnes, with the bank projecting a full-year 2026 average of approximately 60 tonnes per month, or roughly 720 tonnes annually.
Why central bank demand is the most important driver of gold prices
Central bank buying is structurally different from investor or speculative gold flows. Sovereign buyers operate on long time horizons, are less sensitive to short-term price movements, and do not exit positions based on quarterly performance targets.
When Goldman revised its nowcast upward, it was not simply adjusting a forecast. It was identifying that a more powerful and persistent buyer had been present in the market for the better part of a year without being properly measured.
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The World Gold Council independently reported 244 tonnes of central bank gold purchases in Q1 2026 alone, broadly consistent with Goldman’s annualized 720-tonne projection, according to Discovery Alert. The People’s Bank of China purchased 8 tonnes in April, the highest monthly addition since December 2024, according to TradingPedia.
China’s buying streak has now extended to 15 consecutive months through January 2026, and Goldman projects that the underlying reserve diversification trend driving this activity remains firmly intact.
Goldman’s framework holds that emerging-market central banks remain structurally underweight gold relative to their developed-market counterparts, and will continue adding to reserves regardless of near-term price levels.
The structural logic is straightforward: countries seeking to reduce dependence on the US dollar and insulate reserves from geopolitical risk cannot achieve that goal by trading in and out of gold on a quarterly basis.
Goldman’s $5,400 target and the near-term risks the bank is also flagging
Gold fell 3.7% to approximately $4,540 per troy ounce in the week ending May 15, according to Exchange Rates UK. Goldman maintained its $5,400 year-end target despite that pullback, but the note was explicit about near-term vulnerability.
“We view near-term risks to our gold price forecast as skewed to the downside, as gold remains vulnerable to further liquidation should Hormuz disruptions persist and bond or equity markets correct further,” Thomas and Struyven wrote, according to Investing.com.
The bank described gold as “a natural source of cash if private investors face liquidity needs, for example, if equity markets sell off amid higher rates and weaker growth expectations.”
That framing is important because it identifies the specific mechanism by which gold could sell off even while central banks are buying: private investors liquidating holdings to meet margin calls or rebalance portfolios. ETF inflows of 240,000 ounces in the week to May 15 suggest investors were not abandoning the metal despite the price drop, but that stabilizer could reverse quickly if financial conditions tighten further.
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The medium-term case: why Goldman sees risks skewed to the upside
Despite near-term caution, Goldman’s medium-term outlook is more constructive.
The bank’s base case assumes no additional private sector liquidation and 50 basis points of Federal Reserve rate cuts in 2026, which would contribute approximately $120 per ounce in price support from ETF inflows.
Beyond the base case, Goldman sees asymmetric upside if the Iran episode and broader geopolitical developments, including Greenland, Venezuela, and US-China tensions, accelerate diversification into gold and weigh on perceptions of Western fiscal sustainability, according to Investing.com.
The bank also dismissed concerns that Gulf nations might sell gold to support their currencies during the Hormuz crisis, suggesting they are more likely to intervene by liquidating US Treasuries instead, which is itself a structurally bullish signal for gold’s reserve asset status.
Key figures from Goldman’s May 18 gold and central bank demand note:
- Goldman nowcast revision: central bank purchases raised to approximately 50 tonnes per month for March, from prior estimate of 29 tonnes; upward revision of more than 72%, according to Exchange Rates UK
- April estimate: approximately 80 tonnes; full-year 2026 average: 60 tonnes per month, approximately 720 tonnes annually, according to Discovery Alert
- WGC Q1 2026 central bank purchases: 244 tonnes, consistent with Goldman’s annualized projection, Discovery Alert confirmed
- PBoC April purchase: 8 tonnes, highest since December 2024; 15 consecutive months of buying through January 2026, according to TradingPedia
- Goldman year-end 2026 gold price target: $5,400 per troy ounce; spot gold at approximately $4,540 as of May 15, TradingPedia confirmed
- Fed rate cut contribution: 50 basis points of cuts would support approximately $120 per ounce in additional price from ETF inflows, according to Investing.com
- ETF inflows: 240,000 ounces in the week ending May 15, despite the 3.7% price decline, Exchange Rates UK noted
What Goldman’s revised gold model means for investors in 2026
The most important takeaway from Goldman’s note is not the $5,400 target, which has been in place since January 2026. It is the data revision.
Goldman discovered that central banks had been buying significantly more gold than its model captured for nearly eight months. The revision did not require a change in behavior from the buyers. It required better measurement of behavior that was already happening. That distinction matters because it suggests the structural floor under gold prices has been more robust than most investors realized throughout the period of pullbacks and consolidation since January’s peak above $5,600.
For investors navigating gold in the second half of 2026, Goldman’s framework produces a specific set of conditions to watch.
Near-term downside exists if the Hormuz situation deteriorates further and forces private investor liquidation. Medium-term support comes from 60 tonnes per month of central bank buying that is structurally indifferent to price levels. And the upside scenario, which Goldman describes as asymmetric, requires only that geopolitical pressures continue to incentivize reserve diversification away from dollar assets, a trend that shows no sign of reversing.
Related: Analysts have a message for investors on the gold price drop