Gold Prices Could Hit $3,000 Per Ounce In 2025
Gold prices could hit $3,000 an ounce by the end of 2025, even if the value of the U.S. dollar continues to rise, Goldman Sachs has said.
Increases in the value of America’s currency have typically driven down gold prices in reducing demand for the metal as a safe haven asset.
But Goldman Sachs’ analysts say investors could now see increases in both gold prices and the value of the U.S. dollar in 2025, due to interest rate cuts and heightened uncertainty.
Gold prices have increased sharply over the previous 12 months to record highs of more than $2,700 per ounce as investors have piled into gold in seeking to protect their portfolios.
In the view of Goldman Sachs’ analysts, led by Lina Thomas, this rally could now be set to continue, despite expectations of continued increases in the value of the U.S. dollar.
“We push back on the common argument that gold cannot rally to $3,000/toz by end-2025 in a world where the dollar stays stronger for longer,” Goldman Sachs’ analysts said.
Instead, Goldman’s analysts said they expect gold prices will mainly be determined by the extent to which the U.S. Federal Reserve cuts interest rates.
“In our base case, we see a 7% boost from 125 basis points of additional Fed cuts to the end-2025 gold price,” Goldman’s analysts said.
Interest rate cuts typically drive up demand for gold in reducing the attractiveness of government bonds and other interest-yielding assets.
A stronger U.S. dollar could also encourage gold purchases by central banks from across the globe seeking to restore confidence in their own currencies, Goldman’s analysts said.
“Key buyers like China, with large dollar reserves and a long-run strategic interest in diversification, may even increase gold demand during periods of local currency weakness to boost confidence in their currency,” the analysts said.
Uncertainty related to heightened geopolitical tensions and the potential for tariffs from the U.S. could further increase the attractiveness of gold as a safe haven, the analysts said.
“Geopolitical shocks, including tariffs, typically boost both gold and the dollar,” Goldman Sachs’ analysts said.
Investors are broadly expecting more positive data on the state of America’s economy and Trump’s tariffs will boost the value of the U.S. dollar in 2025.
