In the past 48 hours, gold has once again become the focal point of global macro trading.
After breaking out of a range-bound pattern that lasted about half a year, the gold price has further crossed above the 200-day moving average and accumulated a roughly 15% increase from the mid-July low, nearing $4600/oz at one point. The driving force behind this rally has also started to shift from central bank and physical buying to ETFs, macro funds, and the options market.
ZeroHedge cited a Goldman Sachs strategist and trading desk report stating that bullish gold option demand has recently surged. Apart from central bank purchases, Chinese imports, and ETF flows, options trading is introducing a new price amplification mechanism to the gold market.
This implies that the future price action of gold may no longer be solely determined by traditional supply and demand dynamics. As the price nears dense option strike levels, dealer hedging could further drive up the price; once the trend reverses, the same mechanism could amplify the downturn.
Bullish Option Activity Could Propel Gold Price Above $4900
Goldman Sachs observes that investors are re-engaging in global macro and policy risk hedging through bullish gold options.
Sellers of bullish options typically need to dynamically adjust their risk exposure based on gold price movements. When the gold price nears a key strike price, dealers selling options need to buy more gold or gold futures to maintain their hedge. This type of buying pressure may not be based on new fundamental assessments but could create additional demand during an uptrend, driving the price closer to the next strike range faster.
Goldman Sachs refers to it as a "mechanical price amplifier." If ETF funds continue to flow in and call option positions remain high, a rise in gold prices will drive traders to increase their hedged long positions, which in turn could push the price higher, creating a short-term positive feedback loop.
However, this mechanism works in both directions. When the gold price falls, traders unwind their previous hedged positions, increasing selling pressure in the market. Therefore, the more concentrated the option positions are, the more volatile gold's price swings near key levels may become.
Goldman Sachs currently maintains its fair value forecast for gold at $4,900/oz by the end of 2026. This forecast is primarily based on two assumptions: continued strong gold demand from global central banks and Western private investors increasing their gold ETF allocations as the Fed keeps interest rates unchanged.
The report notes that in July, the Fed kept interest rates unchanged, and with weakening US employment and CPI data, market expectations for further rate hikes have cooled. The major macro resistance that was suppressing gold has thus weakened, leading to a recovery in COMEX net speculative positions and rate-sensitive ETF demand.
It is worth noting that the $4,900 forecast does not factor in the impact of the ongoing increase in gold call option demand. Therefore, Goldman Sachs' gold analyst Lina Thomas believes that the current target price faces "significant upside risk." If Western investment demand continues to recover and resonates with central bank buying and macro policy hedging demand, the hedging behavior of traders near the key strike price could drive the gold price significantly above $4,900.
Goldman Sachs' trading desk has also seen more aggressive fund flows. Client trades have significantly increased this week, including both 3- to 6-month digital options and direct purchases of gold, with target ranges centered around $4,800–$5,500. The trading desk currently maintains a moderately high long position while being long volatility, skew, and directional risk.
It is important to distinguish here: $4,900 is the year-end fair value forecast by the Goldman Sachs research team; $4,800–$5,500 is the client trading targets observed by the trading desk and should not be considered as an official upward revision of the target by Goldman Sachs.
China, Central Banks, and ETF Buying Provide Strong Support
Prior to the entry of option funds, gold's bottom support mainly came from China, central banks, and ETF investors.
The Goldman Sachs trading desk stated that this week both Chinese funds and Western macro funds continued to buy gold, and after the U.S. Treasury expanded long-term bond repurchases, related buying pressure further accelerated. Some investors believe that the U.S. Treasury's more active intervention in the long-term bond supply and demand may have a longer-term impact more reflected in the U.S. dollar and gold, rather than the U.S. bond yields themselves.
The trading heat in the Chinese market is particularly evident. The Shanghai market recently saw its two-day rise ranking among the top five in the past five years. However, China's total gold holdings are still about 25% below the historical high. Goldman Sachs concluded that the current position has not yet reached an extremely crowded level.
Physical imports also remain high. Data shows that China's gold import volume in July was 135 tons, lower than June's 173 tons, and slightly below the monthly average of 144 tons in the first half of 2026. However, the decrease mainly came from a reduction in imports through the bonded zone, while customs clearance imports remained relatively stable.
Since the beginning of the year, China's total gold import volume has increased by 444 tons year-on-year, with a growth rate of about 80%. Goldman Sachs believes that this additional demand is enough to offset the impact of announced central bank gold purchases and slowing ETF inflows. CTA funds are also shifting their focus. Goldman's model shows that trend-tracking strategies have covered gold shorts and started to increase long positions, with momentum indicators still skewed towards the positive side.
Central bank demand remains a key pillar of Goldman's long-term gold thesis, but official data is usually disclosed slowly, making it difficult to reflect actual purchases in real-time.
Goldman uses the UK's gold exports to China as a proxy indicator to observe Chinese official demand. In the second quarter of 2026, the UK's gold exports to China averaged 37 tons per month, significantly higher than the 15 tons per month in 2025.
Other reserve management agencies are also resuming purchases. Turkey is gradually buying back gold previously sold at the start of the conflict, with its post-derivative-adjusted holdings at about 809 tons, close to the historical high of around 822 tons. Among the 55 reserve management agencies tracked by Goldman, currently only Russia is in a net selling state.
These data are not directly equivalent to the real-time net purchase volume of central banks worldwide, but they at least indicate that the trend in official gold allocations has not undergone a significant reversal.
Gold Too Expensive, Funds Starting to Bet on Silver Upside
The rapid rise in gold prices is also driving some speculative demand towards silver.
Goldman Sachs trader Adam Gillard pointed out that when the price of gold rises to a high level, retail investors often turn to the lower-priced silver. This substitution effect may be one of the reasons behind the recent surge in silver options trading.
This week saw demand for silver digital options with a three-month maturity and a $90 per ounce strike price. Digital options refer to products that pay a fixed return when the price reaches a specific level at expiry, usually used to speculate on low-probability but high-impact market moves.
Therefore, the more accurate meaning of "90-dollar silver" is that some large clients are buying short-term options with a trigger price of $90, not that Goldman Sachs is predicting silver will definitively reach $90 within three months. The lower implied volatility and higher skew make such tail risk bets attractive to some clients.
Unlike gold, silver lacks the structural demand from central bank purchases, with China also being a net exporter of silver. The upward momentum in silver relies more on gold spillover effects, retail fund switching, and speculative positioning expansion, making its market more elastic and less certain.
The current bullish thesis for gold is built on several pillars: ongoing central bank buying, strong Chinese imports, Western ETF demand recovery, a cooling Fed rate hike expectation, and the amplification of the rally through options hedging. Any reversal of these factors could weaken the market.
The biggest macro risk remains the resurgence of inflation. If a rebound in inflation leads to a repricing of the Fed's rate hike expectations, real rates and the U.S. dollar could rise, prompting ETF and speculative funds to exit gold. Meanwhile, if the gold price moves away from a key strike range, traders might unwind hedges, shifting the options dynamic from contributing to the rally to exerting additional selling pressure, causing a more severe pullback than usual.
The current change in gold is characterized by both long-term allocation demand and short-term trading funds pointing to an uptrend simultaneously. The $4900 target price corresponds to a scenario of central bank and ETF demand recovery, while the $4800–$5500 customer trades and the $90 silver digital option reflect funds betting on a more resilient tail-end market.
What needs to be closely observed next is whether ETF inflows can be sustained, if gold can approach a dense strike range, and if Chinese and central bank buying can continue supporting high prices. Options can accelerate a market move, but they cannot replace genuine fund-driven market support.
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