When central banks buy gold, should investors follow?

Central banks are fuelling a multi-year gold rush, with their aggressive buying helping to drive bullion prices to all-time highs and reshape the outlook for institutional investors, according to Goldman Sachs.

The bank estimates that central banks purchased 64 tonnes of gold in September alone—triple the amount bought in August—and expects this trend to continue as they diversify reserves to hedge against geopolitical and financial risks.

China, for example, added an estimated 15 tonnes to its foreign exchange reserves in September, reported Bloomberg.

Gold’s strong momentum has not gone unnoticed by market analysts.

Goldman Sachs projects that gold prices could reach US$4,900 an ounce by the end of 2026, buoyed by continued central bank accumulation and private investor inflows, especially if the US Federal Reserve maintains an easing monetary policy.

Spot gold was trading around US$4,068 per ounce on Monday, representing a 55 percent gain so far this year, as per Reuters.

However, the path forward is not without volatility.

Gold edged higher after two days of losses triggered by waning optimism that the US Federal Reserve will cut interest rates next month, reported Bloomberg.

Fed officials have shown little conviction for reducing borrowing costs, and traders have scaled back expectations for a December rate cut, with the CME FedWatch tool showing a 45 percent probability—down from more than 60 percent last week, according to CNBC.

The dollar’s recent strength has also weighed on bullion, making it more expensive for non-US investors.

Meanwhile, the market is closely watching upcoming US economic data and statements from key Fed policymakers for further clues on the interest rate trajectory.

Scotiabank analysts offer a more cautious outlook, estimating gold prices at US$3,800 per ounce for 2026, compared with US$3,450 this year, citing uncertain economic conditions and an eventual decline in real interest rates, as reported by CNBC.

Source: https://www.benefitsandpensionsmonitor.com