Gold Drops 5.5% From 3-Month High but Goldman Sachs Still Sees 10% Upside

Gold has fallen 5.5% from the 4,697 three-month high it reached on August 25, trading near 4,436 at press time. Goldman Sachs still expects 4,900 by year-end. The slide has pushed the metal under its 200-day moving average. Barchart said gold has now recorded multiple closes below the line, the first since early June. Gold Price on September 1. Source: TradingView Gold Rally Stalls at a Level Traders Watch Closely The 200-day moving average tracks an assets average closing price over the previous 200 sessions. Gold now sits under that line, which stood near 4,529. The metal briefly traded below 4,400 on Monday, its weakest level since August 19. Barchart noted that the SPDR Gold Shares fund entered a technical correction the last time gold logged multiple closes below the average. That precedent covers one prior episode, not a pattern. Renewed bets on a Federal Reserve rate hike have driven the latest leg down. Higher rates weigh on gold because the metal pays no yield. Goldman Sachs and Fidelity Still Point Higher Nonetheless, Goldman Sachs Research reaffirmed its 4,900 target for the end of 2026 in a note published August 28. From the press-time price, that implies roughly 10% upside. The bank had cut that target by $500 in June as bets on 2026 rate cuts faded. The reduced figure still indicated gains, just smaller ones. Senior commodities analyst Lina Thomas and Global Commodities Research co-head Daan Struyven anchored the call on official buying. We continue to see elevated central bank gold accumulation as a multi-year trend, as central banks diversify their reserves to hedge geopolitical and financial risks, consistent with recent survey evidence, they wrote. The bank expects central banks to buy an average of 50 tonnes per month in 2026, up from 17 tonnes before 2022. Meanwhile, Fidelitys analysis valued gold around 5,000 against the global M2 money supply, about 13% above the press-time price. As for gold, it gained ground last week as the global liquidity profile has started to recover. Based on my Gold Liquidity regression between global M2 and gold, gold is worth around $5k. The near-term risk is one Goldman already named. Its June note put gold at 4,400 by year-end if the Fed hikes, and the metal traded there on Monday. A sustained break would also test the debasement trade, which ties gold and Bitcoin (BTC) demand to currency erosion.