Goldman Sachs has issued its most bullish gold forecast yet, setting targets of $3,700 per ounce by the end of 2025 and $4,000 by mid-2026, while warning that extreme scenarios could drive the precious metal to $5,000 if the Federal Reserve independence comes under threat. The bank’s analysis comes as gold trades at record highs above $3,580 per ounce, having surged 36% this year to become one of the best-performing assets globally.
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Political Pressure on Fed Drives Extreme Scenarios
At the heart of Goldman Sachs most aggressive projections lies growing concern over President Trump’s mounting pressure on Federal Reserve Chairman Jerome Powell and the central bank’s independence. The investment bank calculated that if just 1% of privately held U.S. Treasury investments flow into gold, the price could approach $5,000 per ounce.
“A scenario where Fed independence is damaged would likely lead to higher inflation, lower stock and long-dated bond prices, and an erosion of the dollar’s reserve-currency status,” analysts including Samantha Dart wrote in the bank’s research note. “In contrast, gold is a store of value that doesn’t rely on institutional trust”.
Trump has intensified criticism of Powell throughout 2025, reportedly drafting a letter to fire the Fed chairman and attempting to remove Governor Lisa Cook on disputed mortgage allegations. The president has also demanded interest rate cuts and visited the Fed’s headquarters to criticize renovation costs.
Central Bank Buying Sustains Momentum
Goldman Sachs’ baseline predictions rest on continued robust demand from central banks, which purchased 166 tonnes of gold in the second quarter of 2025, maintaining near-record buying levels from 2024. The World Gold Council reports that central banks now hold over 36,000 tonnes of gold, with 95% expected to increase their holdings further.
China has emerged as a key driver, resuming official purchases late in 2024 and continuing through nine consecutive months in 2025, while Poland led European buying with roughly 90 tonnes in 2024. According to Reuters, this reflects broader efforts by emerging markets to reduce dollar dependence following Western sanctions on Russian reserves in 2022.
Market Performance Reflects Safe-Haven Demand
Gold’s 2025 rally represents its best annual performance since 1978, when the metal gained 132% amid runaway inflation. The SPDR Gold Shares ETF has attracted $11.3 billion in inflows this year, approaching its 2020 record of $15.2 billion.
The precious metal reached fresh records above $3,590 per ounce on September 5 following weak U.S. employment data that reinforced expectations for Federal Reserve rate cuts later this month. Markets now price in a 97.6% probability of a 25 basis point rate reduction at the Fed’s September meeting.
“Gold remains our highest-conviction long recommendation in the commodities space,” Goldman Sachs stated, highlighting the metal’s appeal as traditional hedges like U.S. Treasuries have underperformed during equity market downturns. The bank noted that global gold ETF holdings represent only about 1% of total U.S. Treasuries outstanding and 0.5% of S&P 500 market capitalization, suggesting significant room for portfolio reallocation.