Gold above $5,000? What two major banks project

Gold has returned to the radar of major global banks.

After a few months in the background, overshadowed by the yields of U.S. bonds and the strength of the dollar, gold has regained prominence on global allocation tables. In the last week, the metal accumulated a rise of 5.5%, and for the month, the appreciation has already reached 13%.

Two of the world's largest banks, Goldman Sachs and UBS, have published assessments pointing to a scenario of continued growth. UBS projects gold at $5,400 per troy ounce in the next 12 months. Goldman is working with a target of $4,900 by the end of 2026 but acknowledges that the risk is for the price to go higher.

For those investing or following markets, the important question is not whether gold has risen, but whether the fundamentals support this trajectory. And at this point, the arguments from both banks converge on a concerning diagnosis about the global economy.

Public debt and currency devaluation: the engines of the thesis

UBS frames the movement within a known historical pattern. When investors begin to question the sustainability of public debt in major countries and the solidity of their currencies, precious metals gain strength as a store of value.

This is not a one-off event. The Swiss bank argues that the global increase in public indebtedness, combined with uncertainty about how governments will finance their deficits, creates a structurally favorable environment for gold. Even if oil prices maintain pressure on interest rates in the short term, the underlying scenario pushes investors towards real assets.

As we often analyze in global finance coverage, the tension between expansionary fiscal policy and restrictive monetary policy is one of the most relevant dynamics for any portfolio at this moment. Gold positions itself exactly at this intersection.

The amplifying effect of call options

Goldman Sachs brought a less discussed but important angle to understand the recent volatility. The demand for gold call options has grown significantly, creating a technical mechanism that amplifies price movements in both directions.

The dynamic works like this: when the price of gold approaches relevant strike levels, dealers who sold these options need to buy physical gold or futures contracts to hedge their positions. This forced buying accelerates the rise. Conversely, any pullback causes these same dealers to unwind their hedge, adding selling pressure.

In practice, this means that the rise can be faster than the fundamentals alone would justify, but corrections also tend to be sharper. For investors, the message is clear: gold is in a regime of high volatility in both directions, even with an upward trend.

Interest rates on hold in the U.S.: Goldman's base scenario

A central factor in the thesis of both banks is the trajectory of U.S. interest rates. Goldman works with the projection that the Federal Reserve will keep the base rate unchanged until the end of 2026, in the range of 3.50% to 3.75%.

This scenario is positive for gold for a simple reason. The metal does not pay interest or dividends. When real rates fall or remain stable, the opportunity cost of holding gold decreases. If the market were expecting new interest rate hikes, the metal's attractiveness would be lower. But this conviction, according to Goldman, has weakened.

Goldman's projection of $4,900 per ounce embeds two assumptions: the maintenance of robust purchases by central banks and a recovery of flows to gold ETFs from private investors. Interestingly, the bank admits that its estimate does not yet incorporate the high demand for macro protection via options. If this demand persists, the bias is upward beyond the official target.

For those who follow how US monetary policy impacts different asset classes, the parallel with the crypto market is unavoidable. Bitcoin and gold share the narrative of protection against monetary devaluation, although with very distinct risk profiles.

Central banks continue to buy, and this matters
A frequently underestimated pillar of the gold rally over the past two years is the demand from central banks. China, India, Turkey, and other emerging countries have been consistently accumulating gold reserves, partly as a diversification strategy away from the dollar.

According to data from the World Gold Council, net purchases by central banks exceeded one thousand tons per year in 2023 and 2024, a level not seen since the 1960s. This institutional demand creates a structural floor for prices, unlike previous cycles where gold relied almost exclusively on the appetite of individual investors and funds.

Goldman Sachs highlights that its projection assumes the continuation of this behavior. If central banks maintain their current pace of purchases and gold ETFs see net inflows again, the scenario of $4,900 to $5,400 becomes plausible.

What this means for investors in Brazil
For Brazilian investors, gold carries an additional layer: currency variation. In reais, the metal has already accumulated appreciation exceeding the CDI over the past 24 months, considering the combination of commodity price increases and the devaluation of the real against the dollar.

There are ways to access gold in Brazil through investment funds, ETFs listed on the B3, and even futures contracts on the exchange. Each vehicle has different costs and dynamics, and the choice depends on the investment horizon and tolerance for volatility.

The relevant point is not whether gold will hit $5,000 or $5,400. Bank projections are scenarios, not promises. What matters is the diagnosis behind them: in a world with rising debt, possibly stagnant interest rates, and central banks diversifying their reserves, allocation to real assets gains relative importance within any diversified portfolio.

The big question for the upcoming quarters is whether the Fed will indeed keep interest rates steady. Any hawkish surprise could correct the metal sharply, especially given the amplifying effect of options described by Goldman. But, in the base scenario of the two largest global banks, the direction is clear: upward.

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