Sticky inflows are driving this huge rally in gold, says Goldman Sachs’ Daan Struyven

Gold Market Analysis - Goldman Sachs raised its price target for gold to $4,900 by December of next year, up from the previous target of $4,300 [1] - The gold rally is driven by sticky inflows from private investors with long investment horizons and central banks, not speculative positioning [2][3] - Central banks are accelerating gold purchases after the seasonal summer low, and strategic long-term allocation from investors is broadening [4] - The upside risks to the $4,900 forecast are skewed to the upside because the base case doesn't fully incorporate private sector diversification into ETF gold inflows [4] - The gold market is small, about 70 times smaller than the US Treasury market, so even a small diversification step can significantly impact prices [5] Risks and Catalysts - The main downside risk to the bullish gold forecast is central banks stopping or reversing their buying [7] - Historically, central bank gold buying cycles are long and unlikely to reverse unless there's a significant easing in geopolitical or global fiscal policy risks [8] - Catalysts for the latest rally include uncertainty about trade, credit, regional banking, fiscal policy, seasonality of central bank buying, and major investors recommending higher strategic gold allocation [9] Silver Market Analysis - The medium-term path for silver prices is higher as Fed cuts should boost ETF inflows, but the outlook is more volatile due to the lack of structural central bank support [10] - The silver market rally is partly driven by a squeeze in the physical London market, which is tight and could reverse [10] - Central banks are not buying silver, making the bullish outlook for gold more certain than that of silver [12]