Gold continues to soar to $3,350! Goldman Sachs warns: "tail risks" may drive gold prices to $4,500
Gold prices hit a new high due to Federal Reserve Chairman Jerome Powell's warning about the trade war, currently reported at $3,357.78 per ounce, with a 3.5% increase on Wednesday. The dollar has fallen to a six-month low, exacerbating concerns about a global economic recession. Goldman Sachs predicts that gold prices could reach $3,700 by the end of the year, and may soar to $4,500 if there are policy changes. Analysts point out that tariff uncertainty, economic slowdown, and inflation concerns provide a favorable backdrop for rising gold prices
According to Zhitong Finance APP, due to Federal Reserve Chairman Jerome Powell's warning about the impact of the trade war, volatility on Wall Street has intensified, leading to a significant drop in the stock market and the dollar, while gold prices reached new highs.
Gold prices rose by 0.4% to $3,357.78 per ounce, increasing by 3.5% on Wednesday, marking the largest single-day gain since March 2023. The dollar fell to a six-month low as traders were once again hit by a series of tariff news, while Powell dashed hopes that the Federal Reserve would quickly take action to reassure investors, highlighting the unpredictability of Washington's tariff announcements.
As the escalating trade war has raised concerns about a potential global economic recession, gold has risen nearly 28% this year, surpassing the 27% increase expected in 2024. Meanwhile, the Trump administration is preparing to pressure countries to limit trade with China in U.S. tariff negotiations.
Goldman Sachs emphasized that despite the rise in gold prices, positions have not yet become overly high. Their current optimistic forecast for gold prices by the end of the year is $3,700 per ounce, and in a tail risk scenario, gold prices could reach $4,500 per ounce if there are potential changes in Federal Reserve policy.
Goldman Sachs believes that the current upward trend is sustainable, supported by strong physical demand and inflows from Asian investors. Positioning is still far from optimistic levels, which supports their positive outlook, while macro risks could trigger a super surge in gold prices in the coming months.
Analysts Brian Martin and Daniel Hynes from ANZ Bank stated in a report: "The combination of heightened uncertainty around tariffs, slowing economic growth expectations, inflation concerns, and increased prospects for interest rate cuts creates a perfect backdrop for further gains in precious metals."
The Bloomberg Dollar Spot Index remained flat after a 0.7% decline on Wednesday. Prices for silver, platinum, and palladium rose