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, they expect faster decreases in short-term interest rates in Western countries and China, noting that the gold market has not fully priced in the impact on Western ETF holdings backed by physical gold. Secondly, ongoing strong purchases by emerging market central banks in the London over-the-counter market are anticipated to continue driving the gold rally that started in 2022.
Goldman's nowcasting tool, which provides up-to-date monthly data, indicates that demand for gold by central banks and institutions in the London OTC market remains robust. China has played a significant role in this demand, with estimates similar to those of the World Gold Council. The nowcast tool offers advantages such as monthly updates, transparency at the country level, and the use of customs data and institutional knowledge for more accurate estimates.
Goldman Sachs reaffirmed its bullish stance on gold, citing the expected gradual impact of lower global interest rates, continued high demand from central banks, and gold's traditional role as a hedge against various risks. Despite remaining close to its all-time high, gold prices saw some fluctuations following comments by U.S. Federal Reserve Chair Jerome Powell indicating smaller rate cuts and a cautious approach to monetary policy. Investors are now looking to upcoming labor data for further guidance.
In conclusion, Goldman Sachs' revised gold price forecast highlights the potential for further price increases driven by central bank demand and interest rate movements. Investors should consider the role of gold in their portfolios as a diversification and risk management tool in times of economic uncertainty.
