Gold market appears to be stagnant despiteexpectations of a surge.
Goldman Sachs' New Outlook on Gold Prices
Lately, the gold market has taken a breather from hitting record highs, but is a gold rally in 2025 still an possibility? Well, it seems the investment bank Goldman Sachs might have become more skeptical, but don't count out the gold rally just yet.
The year 2024 was a banner year for gold prices since 2010, with a dip in November. Yet, as investors await a continuation of the rally in 2025, Goldman Sachs has recently taken a more cautious stance.
Price Target Slashed? Not Exactly
Contrary to some reports, Goldman Sachs has not slashed its gold price target. Instead, analysts Lina Thomas and Daan Struyven have readjusted their prediction, lowering it from $3,000 to $2,910. This represents a potential 9.6% gain, down from a previous 13%.
The shift in the bank's forecast is primarily due to the Federal Reserve's unexpectedly moderate interest rate cuts. With a more hawkish stance in December, the Federal Reserve now predicts only two cuts in 2025, compared to the earlier expectation of four. Goldman Sachs sees this shift as potentially hindering the inflow of gold ETFs. Furthermore, the analysts emphasized that central banks still hold the key to the price's direction, with Chinese purchases, in particular, having boosted the price back in spring 2024.
A Gold Rally to Avoid? Don't Bet on It
Fewer interest rate cuts can indeed be negative for the gold price, but looking at current developments, we might not be saying goodbye to the gold rally just yet. China has resumed its gold purchases for the first time since April, offering investors hope. Furthermore, some experts like Markus Bußler still have a $3,000 price target in mind.
While Goldman Sachs' tempered optimism might not be an end-all signal, it suggests we should keep a watchful eye on the market.
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Note: Goldman Sachs has actually reaffirmed and, in some cases, raised its forecasts for gold in 2025. Their base case projects the gold price to reach $3,700 per troy ounce by the end of 2025, with the potential to climb to $3,880 if a U.S. recession occurs. In a high-risk scenario, they even suggest gold could hit $4,500 per ounce by year-end. Despite a brief pause in inflows to gold-backed ETFs in May, the overall outlook remains positive, due to sustained central bank buying, economic risks, and investor diversification away from traditional assets.
Investors should not count out the potential gold rally in 2025, as some experts like Markus Bußler still have a $3,000 price target in mind. Contrary to some reports, Goldman Sachs has not slashed its gold price target; instead, analysts Lina Thomas and Daan Struyven have readjusted it, with a potential gain of 9.6%, down from a previous 13%.
