Central banks are loading up on Gold as the dollar weakens — and Goldman says $3,700 is in sight.

With apologies to Neil Young, investors are still waiting to see what happens after the gold rush according strategists at Goldman Sachs, the yellow metal may still have plenty of room to run.

Goldman’s latest forecast? At least $3,700 per ounce, representing an 11% jump from current levels.

But unlike past frenzies, this rally doesn’t appear to be speculation-driven.
“While some of the initial demand appears to be retail-driven…retail flows appear to have moderated somewhat on the way up,” Goldman’s strategists wrote.

Instead, they point to “Asian official sector buying” — in plain English, central banks — as the key driver behind the recent moves. And that makes the surge look more sustainable.

What’s behind the global gold pivot?
There’s growing evidence that China and other central banks are diversifying away from the U.S. dollar and U.S. Treasuries, especially in the face of Trump’s latest tariffs. With geopolitical tensions rising and economic volatility mounting, many are parking reserves in the time-tested haven.

The data backs it up:

  • The U.S. Dollar Index (DXY) is down 4% in a month and 8% year-to-date.
  • Meanwhile, gold has soared 26% since Jan. 1.

“The price of gold is largely independent of other asset classes… It can also serve as a hedge against inflation and market volatility,” said Morningstar strategist Amy Arnott.

ETF flows reflect the momentum too. SPDR Gold Shares (GLD), the largest gold ETF, briefly surpassed $100 billion in AUM for the first time — even as retail buying has cooled.

And it’s not just gold bars seeing gains. Gold mining stocks are on fire:

  • Newmont is up 47% YTD, second-best in the S&P 500.
  • VanEck Gold Miners ETF (GDX) has surged 50%.

Yet analysts argue that miners remain undervalued. “Gold miners remain mispriced despite an extremely favourable risk-reward profile,” said Bhawana Chhabra of Rosenberg Research.
She notes GDX trades at 15x 2025 earnings, well below its 5-year average of 19x, and far cheaper than the S&P 500’s 20x multiple.

But not everyone is convinced this golden rally will last. Morningstar’s Arnott warns investors not to get greedy: “It’s better viewed as an insurance policy than as a core holding given its lackluster long-term returns.”

Gold may still have upside, especially with central banks buying and the dollar slipping. But for investors, it’s less about striking it rich and more about staying protected in a turbulent world.

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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