Goldman Sachs says China buying 75% more gold than reported

Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.38% Research is standing by its forecast that gold will reach $4,900 per ounce by the end of 2026, pointing to persistent central bank buying and new data suggesting China's gold purchases in July were far larger than official disclosures indicated.

In a research note published this week, Goldman analysts Lina Thomas and Daan Struyven estimated that central banks purchased 44 tonnes of gold in July, more than double the pre-2022 monthly average of 17 tonnes. On a three-month seasonally adjusted basis, the trend stood at 91 tonnes per month. China was the largest contributor, with Goldman estimating its purchases at 35 tonnes — roughly 75% above the 20 tonnes the People's Bank of China officially reported.reuters+1

Hidden Demand

The gap between official and estimated figures reflects a pattern Goldman tracks using its nowcast model, which monitors gold flows through London's over-the-counter market into domestic vaults and third-party custodians. The Bank of England's gold holdings on behalf of foreign central banks rose by 63 tonnes in July, an amount that "far exceeded" the decrease in the Federal Reserve's New York vaults during the month, leading the analysts to conclude that "additional recent central bank purchases are not captured in our July nowcast estimate".kitco

Official World Gold Council data showed net central bank buying of 23 tonnes in July, with China adding 20 tonnes and Poland 8 tonnes. Bloomberg and Reuters Thomson Reuters Corporation ↗ 2.92% separately confirmed that the PBoC's July addition was its largest since October 2023, extending its buying streak to 21 consecutive months.kitco+2

Risks in Both Directions

The $4,900 forecast assumes central banks will average 50 tonnes of monthly purchases in 2026 and that private investor ETF demand will recover as the Federal Reserve holds rates steady. Goldman noted "net upside risk" to the target but warned of greater two-sided volatility driven by gold call options. As gold approaches key strike levels, dealers hedging their short call exposure must buy gold, amplifying rallies — but any reversal could trigger the opposite effect.kitco

In a downside scenario where the Fed hikes rates, the analysts estimated gold could still finish the year near $4,440 per ounce, "materially below our base-case" but above current levels as central bank buying offsets selling by rate-sensitive ETF holders. Goldman originally set a $5,400 year-end target before cutting it to $4,900 in June as expectations for rate cuts faded. Gold was trading lower on Wednesday, pressured by a stronger dollar.investing+3