Investing.com – Gold posted a sharp rebound in recent days, peaking at $2760.91 an ounce in the early hours of Thursday, up 4.75% from last Friday’s low of $2635.60 .
Remember that the had suffered, as a safe haven, from the renewed appetite for risk generated by the election of Donald Trump (and the rise of the Dollar), and had marked a 2-month low at $2,565 per month. November 14, before recovering. Gold has therefore now regained 7.6% since this low.
Regarding yesterday’s gains, we note that they curiously occurred at the same time as the S&P 500 and marked new historical records. However, many people think that Gold will continue to rise next year.
This is particularly the case of Goldman Sachs (NYSE:), which confirmed earlier this week its forecast of an increase in the price of gold to $3,000 by the end of 2025.
“We refute the common argument that gold cannot reach $3,000 by the end of 2025 in a world where the dollar stays stronger for longer,” the bank wrote Wednesday.
The first factor in the rise of gold is, according to her, the action of the Fed’s policy. On this note, Goldman predicted significantly lower interest rates in 2025, predicting that the federal funds rate will fall by more than 100 basis points to the range of 3.25% to 3.5% per year. next. Since gold does not produce interest, it struggles to compete with interest-bearing assets when rates are high. However, this dynamic changes when borrowing costs decrease.
“In our base case scenario, we forecast a 7% increase in the price of gold at the end of 2025 thanks to 125 bps of additional cuts from the Fed,” Goldman said.
The bank has previously said that gold-backed ETFs rose gradually over a six-month period following rate cuts. As such, she expects the metal to rally as growing demand from ETFs increases pressure on the limited supply of gold.
-On the other hand, a stronger dollar will stimulate the wave of gold purchases led by central banks, in a context where foreign institutions are already the main source of demand since 2022, after the restrictions imposed by the United States. United with Russia sparked a race to buy dollar reserves.
Indeed, many countries saw Western sanctions against Moscow as an incentive to diversify away from the greenback, which spurred central bank purchases of gold.
Goldman has already highlighted that this trend will continue, expecting foreign banks to add 30 tonnes of gold per month until 2025, which is structurally higher than the amount purchased before Russia faced sanctions.
“Key buyers like China, which has large dollar reserves and a long-term strategic interest in diversification, could even increase demand for gold during periods of weakness in their local currency to strengthen the confidence in their currency,” the analysts write.
Finally, GS highlighted the potential upward impact on Gold of the universal customs duties planned by Trump.
“When trade tariffs – a key part of our dollar strategists’ 2025 forecast – or more generally geopolitical shocks strengthen the dollar, the dollar and gold prices tend to rise in concert ” Goldman said.
The bank also noted that growing uncertainty over geopolitics and stock market risks can be a boon for both gold and the dollar, which are considered prime safe havens.
