(Bloomberg) — Goldman Sachs Group Inc. has raised its year-end gold price forecast by more than 10%, reflecting growing private sector diversification into bullion in addition to already strong demand from central banks and exchange-traded funds.

The bank increased its December 2026 price target to $5,400 per ounce, up from a previous forecast of $4,900, based on the assumption that private investors who purchased gold as a hedge against macro policy risks will maintain these positions through year-end, analysts including Daan Struyven and Lina Thomas wrote in a note dated January 21.

Unlike previous hedges tied to specific events, such as the November 2024 U.S. elections, positions taken against perceived risks, such as fiscal sustainability, may not fully resolve this year and are therefore “stickier,” the analysts said.

Gold has risen more than 70% over the past 12 months, breaking successive records on a torrid rally that has continued into the early weeks of this year. Capital is being pushed toward safe-haven assets as global power dynamics shift dramatically and President Donald Trump renews his attacks on the Federal Reserve, shaking confidence in the U.S. central bank’s independence.

Purchases by central banks are expected to average 60 tons per month in 2026, with emerging market monetary authorities likely to continue the structural diversification of their reserves into gold, the analysts said.

Western ETF holdings, meanwhile, have increased by approximately 500 tons since the beginning of 2025, exceeding forecasts based solely on U.S. interest rate cuts. Goldman expects an additional 50 basis points of Fed easing in 2026.

As concerns mount over long-term monetary and fiscal policy trajectories in major economies, gold has also been boosted by demand related to the so-called debasement trade, including physical purchases by high-net-worth households and call option purchases by investors, Goldman said.

Risks to the updated forecast are significantly skewed to the upside because private sector investors could further diversify amid persistent global policy uncertainty, the analysts wrote. “That said, a sharp reduction in perceived risks around the long-term path for global fiscal/monetary policy would pose downside risk if it were to trigger the unwinding of macro policy hedges.”