Goldman Sachs Raises Gold Price Forecast for 2025 to $2,900/oz
Goldman Sachs has increased its gold price prediction for early 2025 to $2,900 per troy ounce (toz) from the previous $2,700/toz. This update is based on two key factors.
Firstly, the investment firm anticipates quicker decreases in short-term interest rates in Western countries and China. They believe that the gold market has not fully factored in the impact of rate cuts on Western ETF holdings backed by physical gold, which is expected to happen gradually.
Secondly, ongoing strong purchases by emerging market central banks in the London over-the-counter market are expected to continue driving the gold rally that started in 2022. Goldman Sachs predicts that these purchases will remain consistently high.
Goldman’s nowcasting tool, which offers timely monthly data, shows that central bank and institutional demand for gold in the London OTC market has remained robust. Purchases have averaged 730 tons annually through July, making up about 15% of global annual production estimates.
China has been a significant contributor to this demand, with the nowcast providing estimates similar to those of the World Gold Council. The tool offers advantages like monthly updates, transparency at the country level, and the use of customs data and institutional knowledge for its estimates.
Goldman Sachs reiterated its bullish stance on gold, citing expectations of a gradual boost from lower global interest rates, sustained demand from central banks, and gold’s traditional role as a hedge against various risks.
Following U.S. Federal Reserve Chair Jerome Powell’s comments on interest rate cuts, gold prices have remained near their all-time high. Powell indicated that the Fed is likely to implement smaller rate cuts and emphasized a cautious approach, citing positive economic growth and consumer spending data.
In summary, Goldman Sachs expects gold prices to rise to $2,900/oz in early 2025 due to anticipated interest rate cuts and continued strong demand from central banks. This forecast suggests potential opportunities for investors to capitalize on the upward trend in gold prices.