Gold at 4900 next year? Goldman Sachs: U.S. private investment positions are "severely insufficient," and for every 1 basis point increase in allocation, gold prices will rise by 1.4%

Goldman Sachs believes that the allocation of gold in U.S. private investment portfolios is at a historical low, creating significant room for gold prices to hit the target of $4,900 per ounce within the next year and a half.

According to Wind Trading Desk, Goldman Sachs analysts Lina Thomas and Daan Struyven pointed out in their latest report that the current allocation of U.S. gold ETFs accounts for only 0.17% of private non-cash financial portfolios, which is about 6 basis points lower than the peak level in 2012. This allocation ratio is far below the mid-single-digit percentage allocations recommended by institutions such as Citigroup, UBS, and Bridgewater.

Goldman Sachs estimates that for every 1 basis point increase in the gold share of the U.S. financial portfolio—driven by incremental investors rather than price increases—gold prices would rise by approximately 1.4%. Analysts stated that if diversified capital flows expand from central banks to private investors, the $4,900 gold price target faces "significant upside risks."

As of now, spot gold is quoted at $4,213.2 per ounce, down 0.36% for the day, showing a rebound trend this week.

According to 13F filing data, among large U.S. institutional investors managing over $100 million in assets, less than half hold any exposure to gold ETFs. Even among institutions that hold gold, the allocation ratio is typically only between 0.1% and 0.5%.

Severe Underallocation by Western Investors

Goldman Sachs' research shows that the holding levels of Western ETFs remain consistent with fair value estimates based on the U.S. federal funds rate, without incorporating any additional private sector diversification allocations, leaving room for further portfolio diversification.

In the U.S., gold ETFs—the most commonly used tool for gold exposure by American investors—account for only 0.17% of private non-cash financial portfolios (defined as stocks and bonds). Since the launch of gold ETFs in the mid-2000s, this ratio is still about 6 basis points lower than the peak in 2012, primarily because the growth rate of portfolios over the past decade has outpaced the increases in gold prices and trading volumes.

Goldman Sachs pointed out that several investors have recently suggested increasing gold allocations, with some even recommending allocations exceeding 2%. Citigroup's Global Investment Committee increased its gold position by 2% in June, while UBS's Global Wealth Management department stated, "History shows that allocating a mid-single-digit percentage of gold in a diversified portfolio is optimal."

Limited Participation of Institutional Investors

By analyzing detailed 13F filings tracking the stock and ETF long positions of the largest U.S. investors (managing over $100 million in assets), Goldman Sachs reached two important conclusions.

First, gold ETF holdings are highly concentrated, with less than half of institutions reporting any gold exposure. Second, among all 13F reporting institutions, the share of gold ETFs is also low, calculated at only 0.16% on a value-weighted basis, rising to 0.22% when only including long-term investors According to the 13F filing data for the third quarter of 2025, the gold participation rate among U.S. institutional investors is 46%, up from about 30% in academic research conducted in 2020. Among institutions with gold exposure, the equal-weighted average allocation is 1.7%, while the value-weighted average allocation is 0.22%.

Client feedback indicates that these long-term capital allocators are considering increasing their gold exposure as a strategic portfolio diversification tool. These investors typically operate under multi-quarter approval cycles and multi-year investment horizons. If these private investors seek value storage outside the financial system amid global macro uncertainty (including the fiscal outlook in developed markets), even a modest reallocation from global bond and equity portfolios could significantly boost the relatively small gold market price.

The Impact of Allocation Growth on Prices is Significant

To assess the potential price upside of diversification and de-dollarization themes, Goldman Sachs estimates that for every 1 basis point increase in the gold share of U.S. financial portfolios—driven by incremental investors rather than price appreciation—gold prices would rise by 1.4%.

This estimate is based on Goldman Sachs' pricing framework, where an additional demand of 100 tons would push gold prices up by approximately 1.7%, within a range of 1.5%-2%. Analysts convert a 1 basis point increase in portfolio share into a dollar amount (using the latest gold price of $4,198 per ounce) and then convert it into physical gold demand measured in tons.

Goldman Sachs emphasizes in the report that if global macro uncertainty prompts private investors to seek value storage outside the financial system, even a moderate reallocation from global bond and equity portfolios could significantly elevate prices in the relatively small gold market.

Analysts point out that the U.S. gold share does not represent a global pattern. In much of the world, especially in emerging markets, gold plays a more significant role due to cultural preferences and historically limited access to financial markets, often accounting for a large portion of household wealth. Goldman Sachs cross-asset portfolio strategists estimate that gold constitutes about 6% of global outstanding financial assets