In a recent advisory, Goldman Sachs forecasted further gains for gold, urging investors to “go for gold” amidst a favorable outlook. The world’s second-largest investment bank cites rising market uncertainties and geopolitical tensions as key factors diminishing the appeal of dollar-linked assets, pushing investors towards inflation-hedging commodities. Despite gold’s impressive 25% rise this year, Goldman Sachs echoes other experts in predicting continued upward momentum. This week, gold price surpassed $2,589, signaling strong momentum for the precious metal.
Gold Outshines Rivals
Gold has emerged as the top-performing asset of the year, second only to cryptocurrencies, known for their extreme volatility. While the stock market has achieved record-breaking growth in 2024, it still falls short of gold’s dramatic surge, which pushed the metal far beyond the $2,500 psychological threshold. With a marketwide shift toward commodities driven by rising demand for safe-haven assets, Goldman Sachs analysts predict that gold will continue to be the top-yielding asset in this class.
Gold’s Performance By the Numbers
Gold Price: The spot price of gold recently reached an all-time high of $2,589.02.
Year-to-Date Gain: Gold has surged over 25% in 2024, making it one of the strongest-performing assets.
Government Buying: Central bank gold demand notched a new record in the first half of 2024.
Gold ETFs: Gold-backed ETFs have experienced three straight months of inflows with North American investors taking the lead.
Key Drivers
Goldman Sachs stressed a handful of economic and geopolitical drivers behind gold’s ongoing rally.
Dollar Weakness
The ballooning $35 trillion debt and the weaponization of the dollar have progressively pushed foreign governments away from the dollar. Overwhelmingly, countries are replacing their dollar reserves with physical gold, further destabilizing the global economy and elevating the yellow metal’s value.
Continued Rate Cuts
The Federal Reserve’s 50 basis point rate cut this week is pushing investors to gold. Lower interest rates tend to hurt the dollar as people seek more stable assets to preserve their wealth. The recent release of worse-than-anticipated CPI numbers could lead to more aggressive easing. According to the CME FedWatch Tool, traders are factoring in a 59% chance of a 25-basis-point cut at the Fed’s next meeting in November.
Central Bank Demand
Central banks across the globe have been topping off their reserves, setting gold-buying records in 2022, 2023, and H1 of 2024. Goldman Sachs analysts highlight this government-backed demand as the main driver behind the rise of yellow metal.
Geopolitical Uncertainty
The hot wars in the Middle East and Eastern Europe continue with no end in sight, threatening to spill over into wider conflicts. These rising tensions are holding markets hostage as investors flee to the protection of safe-haven assets like gold.
What are advisors saying?
“Gold stands out as the commodity where we have the highest confidence in near-term upside,” reports Goldman Sachs analysts. “[It] offers significant value as a portfolio hedge.”
The leading bank is maintaining a confident price target of $2,700 by 2025, joining a host of other experts raising their gold price predictions on the back of gold’s record-shattering rally.
Many professionals see a window of opportunity for investors to lock in gold at relatively low prices for higher yields down the line.
“You want to be positioned in gold before the stampede,” suggests Damian White, Sr. Precious Metals Advisor at Scottsdale Bullion & Coin.
The Bottom Line
All of the factors that have propelled gold to its current all-time high are still in play. With economic uncertainty and geopolitical instability reaching peak levels, it seems gold’s rally is far from over. Estimates vary, but many experts are calling for steady upward momentum through 2025 and beyond.
