Goldman Sachs Warns: Traders Forced to “Hype Up” Prices, $4,900 Gold Price Forecast Is “Too Conservative”

Amid intensifying global asset volatility, gold’s rally shows no sign of peaking. Goldman Sachs’ latest views suggest that the original year-end price target of $4,900 now seems conservative. Analysts from the bank emphasize that the current gold price has entered a “mechanical acceleration zone,” with short covering and hedging in the options market pushing gold to levels difficult to justify based on fundamentals.

The recent surge in gold prices is no coincidence. Last week, the US Treasury unexpectedly announced an expanded government bond buyback operation, which directly pressured the US Dollar Index, resulting in gold recording a weekly gain of over 5%. For investors holding non-US currencies, the “discount effect” caused by exchange rate fluctuations is attracting global capital to flood into the gold market.

Goldman Sachs’ analysis attributes the breakthrough at the $4,600 mark mainly to favorable shifts in Federal Reserve policy. With confirmation from the July FOMC meeting and weak non-farm payroll data, the market is now anchored to a September rate cut path. But this is only superficial—the underlying driving force stems from a “Gamma squeeze” in the options market. When investors rush to buy call options in bulk, market makers are forced to increase hedging positions as prices rise, creating a self-reinforcing cycle of “the higher the price, the heavier the buying.”

Goldman Sachs warns that this position-driven rally is highly vulnerable to a “snapback.” If subsequent data compel the market to adjust rate expectations, hedging purchases may instantly become selling pressure, with the corrective force far exceeding regular logic.

On the geopolitical front, the ongoing situation in the Middle East and escalating sanctions have provided solid downside buffers for gold prices. Goldman Sachs points out that central bank accumulation and safe-haven buying have become “stabilizers” for gold.

As for the broad swings in Asian markets, Goldman Sachs believes they should not be over-interpreted as a trend reversal, as they are merely the result of position games. With resonance between central bank demand and technical buying, gold’s path toward $4,900 may be turbulent, but its explosive potential should not be underestimated.

In the coming days, all eyes will focus on Jackson Hole, Wyoming. Federal Reserve Chair Kevin Warsh will deliver a highly anticipated speech. Widely regarded as a structurally pessimistic figure obsessed with “supply-side disruptions,” Warsh’s skepticism regarding traditional monetary policy models brings considerable uncertainty to market judgments about the rate cut path.

Meanwhile, the July Personal Consumption Expenditures (PCE) Price Index— the Federal Reserve’s most favored inflation indicator— is set to be released this week and will directly anchor September’s policy direction. If the data remains weak, it will undoubtedly add fuel to already strong expectations for rate cuts, further reducing the opportunity cost of holding gold.