Gold Could Hit $5,000? Goldman Sachs Speaks Out
Gold prices have the potential to surge to nearly US$5,000 per troy ounce if Donald Trump's attacks on the Federal Reserve erode the US central bank's independence, according to a Goldman Sachs prediction. This year, gold prices have risen 35% to above US$3,500, making it one of the world's best-performing assets. This surge has been driven by an influx of investor and central bank funds seeking protection from political uncertainty and rising debt risks.
The market's primary concern is the Fed's perceived independence as being threatened, particularly following Trump's attempt to fire Governor Lisa Cook. Investors believe that if the Fed becomes too political, it could cut interest rates more quickly than it should. This would raise long-term inflation expectations, depress bond prices, and weaken the dollar's status as the world's reserve currency.
According to Daan Struyven, Head of Global Commodity Research at Goldman Sachs, "a scenario in which the Fed's independence is compromised would likely trigger higher inflation, weaken long-term stock and bond prices, and erode the dollar's status." In such a scenario, gold is seen as a strong store of value because it doesn't rely on institutional trust.
Goldman Sachs estimates that gold prices could reach US$4,000 per ounce by mid-2026 in its baseline scenario. However, if there were a significant shift of funds from dollar assets to gold—for example, 1% of US government bonds held by private investors were diverted—gold prices could potentially approach US$5,000 per ounce. This confirms gold's position as an increasingly attractive safe-haven asset amid global uncertainty.
Furthermore, global central banks have continued to increase their gold reserves, particularly since Russia's invasion of Ukraine in 2022. Central bank purchases of gold have increased fivefold, pushing prices higher. BlackRock analysts added that investors can no longer rely on long-term US bonds to protect their portfolios, making gold a primary choice for more robust diversification. (ayu)
Source: Newsmaker.id
