Gold Rally Hits Hormuz Wall: Why Goldman Is Turning Cautious Now

Goldman Sachs is sticking with its bullish gold call. It’s just no longer comfortable with the path.

In a note published Tuesday, commodities analysts Lina Thomas and Daan Struyven kept their gold’s year-end 2026 target at $5,400 per ounce, but flagged that near-term risks now skew firmly to the downside.

Goldman’s own gold central bank demand nowcast — a real-time estimate stitched together from customs flows and reserve disclosures — picked up just 2 tonnes of net purchases in February, a drop the analysts pinned on a pause in buying amid extreme price volatility.

They are still assuming 60 tonnes of monthly central bank buying for the full year, but the February print is the kind of data point that tends to compound if the next two months disappoint.

“Near-term risks to our gold price forecast are skewed to the downside, as gold remains vulnerable to further liquidation should Hormuz disruptions persist and bonds or equities correct further,” Lina Thomas said in the note.

Chart: Gold Is Down Nearly 20% Since January 2026’s Record Highs

Why Hormuz Is The Key Variable For Gold Now

Goldman’s central case still has gold reaching $5,400 per ounce by year-end 2026, predicated on three pillars: continued central bank diversification, normalization of currently-low speculative positioning, and 50 basis points of Federal Reserve cuts the firm’s economists expect.

None of those have changed. What has changed is the path.

What worries Goldman is the air pocket between here and the destination. If the Hormuz disruption persists — and Iran’s latest ceasefire proposal stalled this week after President Donald Trump rejected the terms — equities and bonds could correct further.

Gold, despite its hedge reputation, tends to behave like a high-beta liquidity sink in those moments. 

The same investors who load up through the build-up sell it first when something else breaks. The firm flagged the call-put open interest ratio on the SPDR Gold Shares (NYSE:GLD), which spiked toward 2.7 million contracts during the Middle East escalation and has since unwound back near 1.5 million — a sign the option overhang has cleared, but at the cost of revealing how much of the rally was leverage rather than conviction.

The WGC Data Confirms The Shift

The World Gold Council released its “Q1 2026 Gold Demand Trends report” on Tuesday, and the headline numbers read like a bull market in full stride.

Total quarterly demand including over-the-counter flows reached 1,231 tonnes — only 2% above last year by volume, but 74% higher by value at a record $193 billion.

The LBMA gold price set a quarterly average record of $4,873 per ounce, up 70% year-on-year, after touching an intraday high of $5,405 in January.

The devil, however, is in the detail.

Through 2025, gold’s rally ran on two engines: central bank accumulation and investor flows into exchange-traded funds.

In the first quarter of 2026 broke one of those engines and showed wear on the other.

Central banks bought 244 tonnes on a net basis, up just 3% year-on-year — a far cry from the double-digit growth that defined the prior two years.

The WGC noted a “visible uptick in selling activity” inside the quarter, language the council rarely uses. Turkey reportedly liquidated roughly 120 tonnes through March to fund foreign exchange operations tied to the Iran conflict.

The ETF line is where the wobble shows most clearly. Gold-backed funds added 62 tonnes in first quarter of the year, collapsing 73% from the 230 tonnes booked in the same quarter of 2025.

The WGC pinned the deceleration on “sizable outflows from US-listed funds in March,” exactly as spot prices peaked.

The opposing signal sits in the physical market. Bar demand reached 397.7 tonnes last quarter, up 50% year-on-year and the highest quarterly print since the WGC series began.

Total bar and coin demand of 473.6 tonnes was the second-highest on record, with Asian retail investors leading the buying as local currency gold prices set fresh records.

Recycling rose only 5% to 366 tonnes and mine production grew 2% to 885 tonnes, meaning the supply response to a price that has doubled in eighteen months remains remarkably muted.

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