Gold finally snapped out of its summer slump. After months bouncing between $3,200 and $3,450, it jumped at the end of August and is now sitting at $3720. Goldman says three things pushed it higher: money flowing back into gold ETFs (funds that hold gold for investors), speculators betting on higher prices, and central banks getting ready to buy again after their usual summer slowdown.
They still see gold hitting $4,000 by mid-2026, but the way they frame it is important. $4,000 isn’t the ceiling, it’s the baseline. The real story is how central banks are changing their playbook. When the U.S. and Europe froze $300 billion of Russia’s reserves in 2022, a message was sent: cash and bonds held abroad aren’t always safe. Gold, on the other hand, can’t be frozen. That’s why emerging market central banks like China, India, and Brazil have been buying at a record pace.
Here’s the gap: the U.S. and Europe hold around 60–70% of their reserves in gold. China sits at 8%. India and Brazil are even lower. The global average is about 20%. If emerging markets move closer to that level, it means years of steady demand. Goldman estimates China could buy 40 tonnes a month for three years and still be playing catch-up.
Seasonal patterns matter too. Central banks usually slow down in the summer, then ramp back up in the fall. That showed up again this year, July demand was just 48 tonnes, well below the 80-tonne monthly average. But even then, Qatar bought 20 tonnes and China 15. Once September hits, demand usually comes roaring back.
ETFs are another key piece. For the last few years, they were net sellers, investors were pulling money out. But in 2025, the trend flipped. ETFs are buying again, and Goldman credits them with about a quarter of the recent rally. Speculators added more fuel with futures bets. That piece is unstable and can reverse quickly, but it shows momentum has turned.
The bigger backdrop matters most. Goldman puts U.S. recession odds at 30% in the next year. If the Fed cuts interest rates, borrowing costs drop, real yields (interest rates adjusted for inflation) fall, and gold usually rallies. On top of that, countries want to hedge their exposure to the dollar. They’re not abandoning it, but they’re diversifying into gold. It’s become a safe, neutral asset in a world where politics can weaponize money.
We’ve seen this before. In the 1970s, after the U.S. cut gold ties from the dollar, gold surged more than twentyfold. The mix back then, inflation, deficits, and geopolitical shocks has echoes of today. And unlike many commodities, gold supply is limited. Mines grow production just 1–2% a year, and recycling can’t cover the difference when buying is this strong.
So when Goldman says $4,000, think of it as the floor, not the ceiling. Upside risks are obvious: China speeding up its buying, geopolitical shocks pushing central banks into gold, or another wave of ETF demand. The downside is limited, maybe a Fed surprise or speculators pulling back but the bigger point is that gold has moved from being a trade to being a long-term reserve asset.
When central banks, investors, and Fed policy all line up, the question isn’t if gold hits $4,000. It’s how far above that it overshoots.
I’m sitting on a little gold mine 😂… best to lock up the only gold I own, my jewelry.