Goldman Sachs: If Middle East conflicts escalate and deepen Western financial concerns, gold will surge past $6,100

Ask AI · How does geopolitics affect Western fiscal credibility?

Since the outbreak of the Middle East conflict on March 31, the price of gold has fallen by about 15% in total. Goldman Sachs maintains a bullish stance, with a benchmark forecast that the gold price will reach $5,400 per ounce by the end of 2026. The firm also believes that if geopolitical conditions deteriorate further and Western fiscal sustainability is hit, gold could test $6,100. In a report released on March 30, analysts from Goldman Sachs’ commodities research team said the root cause of this round of declines is that high oil prices have boosted inflation expectations. The market has re-priced the Federal Reserve’s rate path to imply no rate cuts for the rest of the year, while earlier bullish options positions were forced to be liquidated, amplifying the drop. The decline is mainly driven by technical factors and short-term macro developments and does not alter the medium-term view. The benchmark forecast rests on three pillars: central banks continuing to buy gold, normalization of speculative positions, and the Federal Reserve delivering a total of 50 basis points of rate cuts within the year. If the stock market continues to swing sharply lower or if investors become disappointed with gold’s performance and choose to move to cash, the gold price could fall to $3,800. Conversely, if geopolitical shocks accelerate diversification of private-sector assets and erode Western fiscal credibility, gold could rise to $6,100.