By Yihui Xie

(Bloomberg) -- Goldman Sachs Group, Inc., long bullish on gold, said there’s room for the precious metal to rally even higher than its forecast, citing interest from private investors.

Surprisingly strong inflows to bullion-backed exchange-traded funds have exceeded their previous model, analysts including Daan Struyven said in a note. The potential for private investors to diversify significantly into gold presents a “large upside risk” to their forecast of $4,000 per ounce for mid-2026 and $4,300 per ounce for the end of next year.

Most Read from Bloomberg

• California-to-Vegas High-Speed Rail Costs Jump $5.5 Billion

• NYC’s Transit System Raises Fares, Tolls as MetroCard Nears End

• What Happens If You Just Give People Cash – in Crypto

The bank said a month ago that gold can near $5,000 an ounce were it to see inflows from just 1% of the privately-owned US Treasury market.

Gold is up 12% since Aug. 29, having broken out of the $3,200-$3,450 an ounce range in which it spent much of the second and third quarters. One catalyst is that central banks could be re-accelerating their gold-buying after a seasonal summer lull, the analysts said, while speculative positioning explains only a small amount of the latest breakout.

Bullion has been one of the strongest performing major commodities of late, soaring nearly 50% this year and surpassing the inflation-adjusted record hit in 1980. The surge has been driven by concerted central-bank buying and the Federal Reserve resuming interest-rate cuts.

Gold was trading around $3,865 an ounce on Thursday, holding a five-day rally that saw it hit multiple records and inch closer to the next milestone of $4,000. The run came as the US government shutdown reinforced fiscal concerns and pressure on the dollar.

Most Read from Bloomberg Businessweek

• National Parks Told to Remain Open During Shutdown Despite Risks

• A Crypto Billionaire’s Path From Pariah to Trump Moneyman

• The Tech Fashion Darling Accused of Swindling Investors Out of $300 Million

• MrBeast on His Quest to Turn YouTube Fame Into an Entertainment Empire