Goldman Sachs has increased its end-2026 gold price forecast to $3,400.00 per ounce, representing a $500.00 upward revision from its previous target of $2,900.00 per ounce. The investment bank attributes this bullish outlook to continued diversification into gold by private-sector buyers and emerging market central banks seeking to hedge against global policy risks.

Key Forecast Revisions

The brokerage's updated projections reflect several market dynamics that have supported gold's performance:

Market Performance and Drivers

Goldman Sachs expects private sector diversification buyers to maintain their gold holdings throughout 2026, effectively raising the baseline for price forecasts. In a note dated Wednesday, the brokerage stated that these purchases, which hedge global policy risks, have driven upside surprises to previous price forecasts.

The investment bank anticipates Western ETF holdings will rise as the U.S. Federal Reserve is likely to implement a 50.00 basis point reduction in the funds rate during 2026. Additionally, Goldman expects central bank buying to average 60.00 tonnes in 2026, driven by emerging market central banks continuing their reserve diversification strategies.

Risk Factors

Despite the optimistic forecast, Goldman Sachs identified potential downside risks to gold prices. The brokerage noted that a sharp reduction in perceived risks around the long-run path for global monetary policy could pose downside pressure if it leads to liquidation of macro policy hedges. This scenario would represent a shift away from the current trend of using gold as a hedge against policy uncertainty.

Market Outlook

The revised forecast reflects Goldman Sachs' assessment that structural demand from both institutional and central bank buyers will continue supporting gold prices. The combination of expected Federal Reserve rate cuts and ongoing geopolitical uncertainties appears to underpin the investment bank's bullish stance on the precious metal through 2026.

Gold and silver exchange-traded funds experienced dramatic declines on January 22, with some ETFs plunging as much as 21% following significant geopolitical developments. The sharp fall came after Trump withdrew threats to impose tariffs on several nations over their stance on Greenland, marking a reversal from earlier tensions that had driven precious metals to record highs.

Trump's Policy Reversal

Trump announced he had reached preliminary agreement outlines with NATO regarding Greenland's future during a meeting with NATO Secretary General Mark Rutte in Davos. Writing on Truth Social, he stated: "Based upon this understanding, I will not be imposing the tariffs that were scheduled to go into effect on February 1st." However, he did not provide specific details about the agreement.

Significantly, Trump also ruled out using military force to acquire Greenland, stating: "I won't do that. Now everyone's saying 'oh, good' that's probably the biggest statement I made because people thought I would use force. I don't have to use force, I don't want to use force, I won't use force."

Silver ETF Performance

Silver ETFs bore the brunt of the sell-off, with several funds experiencing double-digit declines. The performance breakdown shows the extent of the market reaction:

Additional silver ETFs also posted significant losses, with Kotak Silver ETF, Mirae Asset Silver ETF, and Aditya Birla Sun Life Silver ETF each declining nearly 15%. Meanwhile, Nippon Silver ETF (Silverbees), DSP Silver ETF, HDFC Silver ETF, ICICI Prudential Silver ETF, and Bandhan Silver ETF fell approximately 14% each.

Gold ETF Declines

Gold ETFs also experienced substantial losses, though generally less severe than their silver counterparts:

Other gold ETFs, including DSP Gold ETF, HDFC Gold ETF, Nippon India Gold ETF (Goldbees), and LIC MF Gold ETF, declined more than 9% each after reaching fresh lifetime highs in the previous trading session.

Market Context

The ETF declines mirror broader movements in gold and silver prices, which had experienced a record rally amid earlier geopolitical tensions. Trump's previous threats to use military force to acquire Greenland had triggered tensions between the US and EU nations, while tariff threats further fueled geopolitical concerns. This environment had increased demand for safe-haven assets like gold and silver due to rising risk-off sentiment among investors.

The reversal in precious metals prices reflects how quickly market sentiment can shift based on geopolitical developments, particularly when involving major global powers and trade relationships.