Goldman Sachs revisits gold price target for 2026

Core Insights - Gold prices experienced significant volatility, surging over 50% year-to-date to nearly $4,400 per ounce, followed by a sharp decline of over 6% on October 21, raising questions about the sustainability of this rally [1][2] - Despite the recent downturn, Goldman Sachs maintains a positive outlook for gold prices, projecting continued strength through 2026 [2] Economic Context - The current economic environment is characterized by uncertainty, with the Federal Reserve balancing its dual mandate of low unemployment and inflation control [3] - The jobs market is showing signs of weakness, with unemployment rising to 4.3% in August, the highest since 2021, and nearly 1 million layoffs reported, a 55% increase from the same period in 2024 [5][6] - Inflation has also risen, with the Consumer Price Index at 3% in September, up from 2.3% in April, coinciding with the implementation of tariffs [5] Market Dynamics - The decline in Treasury yields and the U.S. Dollar has been favorable for gold, as lower yields reduce the attractiveness of bonds as a safe-haven investment [8] - The 10-year Treasury yield has decreased to 4% from 4.77% earlier in the year, while the U.S. Dollar Index has fallen from 109 to 99 [8] - Historically, gold prices tend to move inversely to Treasury yields and the U.S. Dollar, making gold more appealing to foreign buyers when the dollar weakens [9]