Strong demand from the central bank, Goldman Sachs raises gold price target, aiming for $3,100!
Goldman Sachs believes that rising inflation concerns and fiscal risks may drive central banks to purchase more gold, especially those that hold a large amount of U.S. Treasury bonds. Coupled with heightened worries over Trump's destructive tariff policies, Goldman Sachs has raised its year-end target price to $3,100, stating, "If economic policy uncertainty persists, an increase in speculative positions could drive gold prices to soar to $3,300."
Wall Street's bullish sentiment towards gold continues to rise, with Goldman Sachs also raising its year-end target price for gold from the previous $3,000 to $3,100 per ounce.
Goldman Sachs analysts Lina Thomas and Daan Struyven pointed out in their latest report that strong central bank demand and inflows into gold ETFs support their expectations.
In fact, since the beginning of this year, gold prices have set new highs for seven consecutive weeks, continuing last year's upward momentum. Goldman Sachs noted that the sustained rise in gold prices is primarily driven by three major factors: increased central bank gold purchases, consecutive interest rate cuts by the Federal Reserve, and heightened investor concerns over U.S. President Trump's destructive tariff policies.
Goldman Sachs expects that the average monthly gold purchase by central banks could reach 50 tons, far exceeding previous expectations. Moreover:
"If economic policy uncertainty, including tariff policies, persists, increased speculative positions could drive gold prices to soar to $3,300 per ounce."
This level would imply a 26% increase in gold prices for the year.
Additionally, according to estimated data, global central banks purchased 108 tons of gold just in December 2024. Analysts believe that inflation concerns and rising fiscal risks may drive central banks to buy more gold, especially those holding large amounts of U.S. Treasury bonds.
Besides central bank demand, Goldman Sachs also expects that two interest rate cuts by the Federal Reserve will "gradually boost" gold ETF holdings.
However, recently gold prices have seen some pullback, and as of now, spot gold prices hover around $2,913 per ounce, having previously surpassed $2,942 and set a historical high, but Goldman Sachs remains firmly bullish.
