Goldman Sachs has revised its year-end gold price forecast to $3,100 per ounce, up from its previous estimate of $3,000. The investment bank cites continued strong demand from central banks and growing economic policy uncertainty as key factors driving the upward revision.

In a note to clients on Monday, Goldman Sachs analysts Lina Thomas and Daan Struyven highlighted that central bank gold purchases could reach a monthly average of 50 tons this year, exceeding their earlier projections. This robust demand, coupled with increased investment in gold-backed exchange-traded funds (ETFs), is expected to support gold prices in the coming months.

Furthermore, the analysts acknowledged the potential for even higher prices due to persistent economic policy uncertainty, particularly concerning trade tensions and potential tariffs. They suggested that gold could briefly spike to $3,300 per ounce if these uncertainties intensify, representing a 26% annual increase.

Gold has been on an upward trajectory in recent months, fueled by increased central bank buying, expectations of interest rate cuts by the Federal Reserve, and growing investor concerns about the potential impact of the Trump administration's trade policies.

Goldman Sachs pointed to the increasing likelihood of trade tensions as a significant driver of demand for gold as a hedge against risk. They also noted that concerns about inflation and fiscal risks could further incentivize central banks to accumulate gold reserves. The anticipated Fed rate cuts are expected to gradually increase ETF holdings, adding to the upward pressure on prices.

Other financial institutions have also expressed bullish views on gold. Earlier this month, Citigroup predicted that gold could reach $3,000 per ounce within three months, driven by safe-haven demand amid geopolitical tensions and trade wars. UBS also anticipates gold prices peaking at $3,200 per ounce in the second half of the year, citing high macroeconomic uncertainty and growing investor interest in gold as a portfolio diversifier.

Central banks have been actively increasing their gold reserves. The People's Bank of China, for instance, has expanded its gold holdings for three consecutive months as of January. According to the World Gold Council, central banks in Poland and India have also been significant buyers of gold.

While holdings in gold-backed ETFs have been increasing, they remain well below the peak levels seen during the pandemic in 2020.

Spot gold prices have surged by approximately 45% over the past 12 months, already climbing 10% this year from around $2,669 per ounce. This performance surpasses that of US stocks, bonds, the Swiss franc, and the Japanese yen.

The confluence of strong central bank demand, economic policy uncertainty, and rising investor interest suggests that gold prices could continue their upward trend in the months ahead.