GOLDMAN SACHS forecasting GOLD PRICES to RECORD HIGHS!
GOLDMAN SACHS forecasting GOLD PRICES to RECORD HIGHS!
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The price of gold has soared to new heights this year and is positioned to climb into early 2025, rising to new record highs, according to Goldman Sachs Research.
The precious metal has increased more than 20% this year, peaking at a record of more than $2,500 per troy ounce. Goldman Sachs Research forecasts the price will reach $2,700 by early next year, buoyed by interest rate cuts by the Federal Reserve and gold purchases by emerging market central banks. The metal could get an additional boost if the US imposes new financial sanctions or if concerns mount about the US debt burden.
Gold is our strategists’ preferred near-term long (the commodity they most expect to go up in the short term), and it’s also their preferred hedge against geopolitical and financial risks.
“In this softer cyclical environment, gold stands out as the commodity where we have the highest confidence in near-term upside,” Goldman Sachs Research strategists Samantha Dart and Lina Thomas write. They point to three factors in particular that could push gold prices higher:
Central bank purchases: Since Russia’s invasion of Ukraine in 2022, central banks have been buying gold at a brisk pace — roughly triple the amount prior. Goldman Sachs Research expects the buying spree to persist amid concerns about US financial sanctions and the growing US sovereign debt burden.
Fed rate cuts: Higher interest rates tend to make gold, which doesn’t offer a yield, less attractive to investors. Rate cuts by the Fed will likely bring Western investors back into the gold market after largely being absent during the metal’s sharp rally over the past two years.
Potential geopolitical shocks: Gold offers significant value as a portfolio hedge against developments such as tariffs, Fed subordination risk (i.e., the risk that its independence may be undermined), and debt sustainability fears. Our researchers see roughly 15% upside in gold prices under a rise in financial sanctions equal to the rise seen since 2021, and similar gains if mounting debt concerns spur US government credit-default swap spreads (a measure of credit worthiness) to widen by 1 standard deviation (13 basis points).
Investors may need to be more selective when investing in other commodities, given softening in the global economy, according to Goldman Sachs Research. Our strategists make note of several challenges:
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