Goldman Sachs Raises Gold Price Forecast for 2025 to $2,900/oz - What This Means for Investors
Goldman Sachs has raised its gold price forecast for early 2025 to $2,900 per troy ounce (toz) from $2,700/toz, citing two key reasons. Firstly, they expect faster declines in short-term interest rates in Western countries and China, which the gold market has not fully priced in yet. Secondly, ongoing robust purchases by emerging market central banks in the London over-the-counter market are expected to continue fueling the gold rally.
Goldman's nowcasting tool shows strong central bank and institutional demand for gold in the London OTC market, with purchases averaging 730 tons on an annualized basis. China has notably contributed to this demand. The investment bank reiterated its long gold recommendation, highlighting the anticipated boost from lower global interest rates and the higher demand from central banks.
Gold prices are near their all-time high after U.S. Federal Reserve Chair Jerome Powell downplayed significant interest rate cuts this year. Powell emphasized that the Fed is likely to proceed with smaller rate cuts and is not in a hurry to reduce rates, following positive economic data.
In conclusion, Goldman Sachs's raised gold price forecast suggests a bullish outlook for the precious metal. Investors may consider adding gold to their portfolios as a hedge against geopolitical, financial, and recessionary risks. Keep an eye on upcoming labor data for further insights into the market.