Against the backdrop of market volatility and rising recession risks, Goldman Sachs has recently significantly raised its gold price forecast.
In a report released on the 11th, the Goldman Sachs Lina Thomas team increased the target price for gold at the end of 2025 from $3,300 per ounce to $3,700 per ounce, and expects a trading range of $3,650 to $3,950.
This adjustment reflects stronger-than-expected central bank gold purchases, increased recession risks boosting ETF inflows, and gold's unique status as a safe-haven asset.
In extreme cases, if central bank demand continues to rise to 110 tons per month, ETF holdings rebound to pandemic levels, and speculative positions reach historical highs, gold could even touch $4,500 per ounce. However, such a scenario is considered a low-probability event.
<h2>Central Bank Gold Purchases Exceed Expectations, Year-End Target Price for Gold at $3,700</h2>
After the announcement of U.S. tariffs on April 2, gold prices briefly fell by 5% before quickly rebounding, mainly due to investors closing positions to respond to stock market sell-offs.
However, as concerns about economic recession intensified, investors gradually resumed their gold investments, leading to an increase in ETF holdings, which further propelled the rise in gold prices. As of the time of writing, spot gold has reached a high of $3,237 per ounce.
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Goldman Sachs has raised its year-end gold price forecast for 2025 to $3,700 per ounce, an increase of $400 from the previous forecast, with the corresponding forecast range adjusted from $3,250-$3,520 to $3,650-$3,950. This adjustment reflects a strong recovery in central bank demand. Additionally, given the current economic uncertainty, ETF inflows are expected to increase further.
Goldman Sachs has raised its expectation for central bank gold purchases from 70 tons per month to 80 tons, although this figure is still below the average level of 86 tons per month since 2022, but far above the baseline of 17 tons per month prior to 2022.
In recent months, central bank purchasing demand has remained strong, with Goldman Sachs' February forecast showing central bank gold purchases at 106 tons, far exceeding the previously assumed 70 tons per month. Since November 2024, against the backdrop of increasing uncertainty in U.S. policy, central bank purchases have clearly rebounded, with an average purchase volume of 109 tons from November to February.
<h2>Risk Outlook Upward, Gold Prices Could Reach $4,500 in Extreme Cases</h2>
Goldman Sachs expects the Federal Reserve to make three 25 basis point rate cuts in 2025, which is typically a fundamental predictive factor for gold ETF inflows. However, recent inflows have exceeded expectations, likely reflecting increased demand from investors to hedge against recession risks and declines in risk asset prices. History shows that during periods of recession concerns, ETF inflows often significantly and persistently exceed levels implied by Federal Reserve interest rates.
Given that Goldman Sachs economists now assess the probability of the U.S. entering a recession in the next 12 months at 45%, they have incorporated this factor into their ETF rate-based forecasts, adjusting for recession-related ETF excess inflows weighted by recession probability
If a recession really occurs, ETF inflows may accelerate further, pushing gold prices to $3,880 per ounce by the end of the year.
In the medium term, Goldman Sachs stated that the risks to the revised forecast remain tilted to the upside. In terms of central banks, if the average monthly purchase volume reaches 100 tons/month (instead of the baseline scenario of 80 tons), gold prices could reach $3,810 per ounce by the end of 2025.
In extreme tail risk scenarios, such as increased market focus on the risks of the Federal Reserve's subordination or changes in U.S. reserve policy, leading to central bank demand rising continuously to 110 tons/month, and a rebound in ETF holdings to pandemic levels due to a U.S. recession, with speculative positions reaching historical highs, gold prices could approach $4,500 per ounce by the end of 2025. However, such a scenario is considered a low-probability event.
Goldman Sachs reiterated its bullish gold trading recommendation. Recent pressures in the U.S. bond market and the recent rebound in gold have strengthened Goldman Sachs' belief that gold has a unique position in hedging recession risks. This week's bond market tension and rising gold prices further enhanced Goldman Sachs' confidence in gold as a unique tool for hedging recession risks

In extreme cases, if the market focuses on the risks of the Federal Reserve's independence or changes in U.S. reserve policy, central bank demand could continue to rise to 110 tons/month, and a recession in the U.S. could lead to ETF holdings rebounding to pandemic levels. Goldman Sachs believes that gold could even reach $4,500

- Goldman Sachs has raised its gold price forecast for the end of 2025 from $3,300 to $3,700 per ounce, reflecting stronger-than-expected central bank demand and increased recession risks.  
- The report indicates that if central bank purchases rise to 110 tons per month and ETF holdings rebound, gold could potentially reach $4,500 per ounce, although this scenario is considered low probability.  
- The firm maintains a bullish stance on gold, emphasizing its unique position as a hedge against recession risks amid current economic uncertainties.