Goldman Sachs raises gold price target to S$2,900/oz by early 2025 on sovereign buying, fund flows
NEW YORK (October 1) Goldman Sachs announced on Monday that it has raised its gold price forecast by $200 per ounce, from $2,700 to $2,900, by early 2025.
“We reiterate our long gold recommendation due to the gradual boost from lower global interest rates, structurally higher central bank demand and gold’s hedging benefits against geopolitical, financial, and recessionary risks,” the bank said in a note.
Goldman Sachs also raised its average gold price forecast for 2024 to $2,395 per ounce from $2,357 per ounce, and its 2025 outlook to $2,973 per ounce from $2,686 per ounce.
“Our nowcast of central bank and other institutional demand in the London over-the-counter (OTC) market shows that purchases remained strong through July, averaging 730 tons annualized year-to-date, or about 15% of global annual production estimates, with a large contribution from China,” Goldman wrote.
The analysts said that “moderating but still significant” central bank purchases on the London OTC market would be responsible for about two-thirds of their expected rise to $2,900 per ounce in early 2025, with a gradual increase in exchange-traded fund flows following Fed rate cuts driving the remaining one-third of gold’s price upside.
This is a significant upgrade for the yellow metal, as less than one month ago Goldman Sachs pushed their earlier $2,700 price forecast to Q1 2025 from Q4 2024.
While they’d closed the book on multiple commodity-focused investments, Goldman’s analysts wrote in a commodities update that “Gold stands out as the commodity where we have the highest confidence in near-term upside.”
At the time, they said they continued to hold a bullish target of $2,700 per ounce for early 2025 and had opened a gold-buying recommendation for three reasons.
First, the analysts said they “believe that the tripling in central bank purchases since mid-2022 on fears about US financial sanctions and US sovereign debt is structural and will continue, reported or unreported.”
Second, they said, “Imminent Fed rate cuts are poised to bring Western capital back into the gold market, a component largely absent of the sharp gold rally observed in the last two years.”
Finally, the analysts said that gold “offers significant hedging value to portfolios against geopolitical shocks including tariffs, Fed subordination risk, and debt fears.”
“Our analysis suggests an upside of 15% in gold prices under a hypothetical rise in financial sanctions equal to the rise seen since 2021 and a similar upside if US CDS spreads widen by 1,” they wrote. “That said, due to the particularly price-sensitive Chinese market digesting the recent price rally, we have adjusted our $2,700 target to early 2025 vs year-end 2024 previously. However, we believe that that same price sensitivity also insures against hypothetical large price declines, which would likely reinvigorate Chinese buying.”
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