A Market Built on Accumulation
Gold may be classified as a commodity, but according to Goldman Sachs, its price behaves more like prime Manhattan real estate than oil or gas. Unlike energy sources, gold isn’t consumed — it’s accumulated. Nearly all of the 220,000 metric tons ever mined still exists today, locked in vaults, central bank reserves, or jewelry boxes. Annual production adds just over 1% to global stock, leaving price moves driven more by ownership shifts than by traditional supply-and-demand balances.
“You can’t pump gold — but you can bid it out of someone’s hands,” Goldman analysts wrote. “The gold price reflects who is more willing to hold it and who’s willing to let go.”
Conviction vs. Opportunistic Buyers
Goldman divides buyers into two camps. Conviction buyers — central banks, ETFs, and large speculators — purchase regardless of price, setting the long-term trend. Opportunistic buyers, such as households in India and China, step in when prices dip, providing a natural floor.
This mirrors New York real estate: conviction buyers with deep pockets will pay almost any price to secure a Manhattan apartment, while others wait for favorable conditions before buying. In both markets, price swings depend not on new supply but on who takes ownership.
How Gold Prices Move
Goldman’s analysis shows conviction flows explain about 70% of monthly price moves. Every 100 tons of net buying pushes prices up roughly 1.7%. With limited new supply, the marginal buyer — and their willingness to pay — determines where prices settle.
The dynamic differs sharply from commodities like oil, where higher prices suppress demand. In gold’s case, ownership changes — not production or use — dictate value.
Outlook Remains Bullish
Gold has had a volatile year. Prices spiked to a record above $3,500 per ounce in April after President Donald Trump announced sweeping tariffs and amid concerns over the Federal Reserve’s independence. Spot gold now trades around $3,330 per ounce, up 27% year-to-date.
Goldman Sachs projects further gains, forecasting spot prices will climb to $3,700 per ounce by the end of 2025 and hit $4,000 per ounce by mid-2026. For conviction buyers, the analogy to Manhattan real estate holds: scarcity and demand from deep-pocketed players continue to drive the market higher.
