Goldman Sachs Forecast: Gold Price Could Hit $3,880 in 2025

‍ Updated⁤ May 27, ⁤2025
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Goldman Sachs predicts the price of gold could surge to $3,880 per ounce in 2025, driven by strong central bank demand ‍and economic uncertainties. This bullish forecast follows a year where gold has already outperformed both stock markets and bonds, climbing 27% to $3,351 per ounce as of May 26.

The investment bank recently increased its price target for⁢ gold to $3,700 by the end of 2025, anticipating a further 10% increase.JP Morgan strategists foresee gold potentially reaching $4,000 per ounce by the second⁣ quarter⁤ of 2026.

Traditionally⁣ viewed as a safe ⁢haven asset, gold tends to⁢ attract investors during economic downturns or periods of stock⁢ market volatility. While stock rallied in mid-April, a pause in trade tensions ⁢between China ‍and⁣ the U.S. briefly tempered gold’s rise from its peak‍ of $3,433 on May 6.

However, ⁢concerns surrounding the federal budget, stalled tariff negotiations with Europe, and the potential impact of existing tariffs have since reignited gold’s upward trajectory. Goldman Sachs analysts believe these factors will persist,⁣ further boosting gold prices.

Central Banks Fueling Gold Demand

Beyond economic uncertainty, ⁢goldman Sachs highlights increased demand from central banks as‍ a key driver. With approximately $12 trillion ‍in foreign exchange reserves, central banks use gold to hedge against ‍inflation and⁣ protect their currencies.

As the freezing of Russian assets in Europe, ⁤central banks have been buying more gold, according to Goldman Sachs.

“Thay can keep the metal in their own vaults on their own territory, out of reach of other institutions and governments around the world,” Goldman Sachs researchers wrote, noting a fivefold increase in central bank gold purchases since 2022.

while the U.S., ‍Germany, france, and Italy hold over 70% of their reserves in gold, emerging markets are also increasing their gold holdings. Lina Thomas, commodities strategist at Goldman Sachs, notes⁣ that central bank buying is creating a higher floor for gold prices.

“Central banks are structurally⁣ raising the floor under prices‍ by steadily reducing the amount of gold available for trading‍ in the market,” Thomas said.“As an inevitable result, even during ⁢corrections, the new lows are higher than where ⁢prices were just a few weeks earlier.”

Interest Rates and Gold ETFs

Anticipated interest rate cuts could also propel gold prices higher, as lower rates typically make gold more appealing to investors, driving investments in gold ETFs. Gold ETFs currently manage approximately $294 billion in assets, largely held by pension funds and individual investors.

“We are seeing a steep ramp-up in ETF holdings, beyond the level that an interest rate model would imply, as investors worry about a potential recession,” Thomas said.

“[G]old prices have historically been correlated with interest rates,” according to Goldman Sachs. “More recently, central ‍bank buying has ‍caused the two to diverge… While ETF holdings tend to track interest rates closely, they frequently enough overshoot considerably⁣ when recession fears grow.”

While Goldman Sachs’ base target is $3,700 ⁢by year-end, a recession could push gold prices as high as $3,880.

“While the key factor since 2022 used to be central bank buying alone, ETF investors are now joining the gold rally,” Thomas said. “As⁣ both compete for ⁣the same bullion, we are expecting gold prices to rise even further.”

What’s next

Investors will closely monitor central bank policies, economic ⁣indicators, and ‍geopolitical developments to‍ gauge the future trajectory of gold prices. The interplay between interest rates, ETF investments, and central bank demand⁢ will likely determine⁣ whether‍ gold ⁣reaches or exceeds Goldman Sachs’ ambitious forecast.