Goldman Sachs increased its forecast for the price of gold indicating that it could reach $3,300 for every ounce by the close of this year. To back their revised prediction, the bank mentioned the increasing investment inflows into gold ETFs and the surging gold purchases of central banks around the world.
This latest forecast was made by Daan Struyven and Lina Thomas, both analysts at the bank. Last month, the pair revised the bank’s earlier forecast and upgraded it to $3,100 and now they have raised it yet again.
Their note published on Thursday explains that they had previously expected official sector monthly demand for gold would be approximately 50 tons but it has turned out to be a lot higher and they anticipate that it will be approximately 70 tons of gold each month, hence their revised price prediction.
The price of gold has seen a 15% increase so far during this year. This follows major gains made last year that were partly due to the Fed’s switch to monetary policy easing. Interest rate cuts boosted the price of gold and strengthened its bullish trend. This month, the psychologically pivotal price of $3,000 was breached amid economic uncertainty triggered by the tariffs rhetoric of President Trump.
The analysts write that central banks have been buying approximately 190 tons of the precious metal every month, and they expect this accumulation to be sustained for the medium term. They also say they expect China to continue accumulating gold reserves for the next 3 years, or even more.
Goldman Sachs notes that central banks from emerging markets have ramped up their gold accumulation fivefold from 2022. What is notable about that year is that Russian forex assets were frozen after the Kremlin invaded Ukraine. The freezing of those reserves, the Goldman Sachs analysts say, served as an inflection point in the way countries manage their reserves and this structural change is unlikely to change any time soon.
The bank analysts also discussed the cash inflows into gold ETFs. They say investor demand was surprisingly high as more looked to this safe haven asset as a way to protect their portfolios. If macro uncertainty persists, gold ETFs could break from their traditional behavior of tracking the Fed’s monetary policy and a massive price surge could result.
If that massive surge happens, the analysts write, the price of gold could exceed $3,680 this year. This scenario illustrates just how bullish Struyven and Thomas are with regard to their outlook for gold in 2025.
If the price increases happen as various analysts are predicting, the market could provide significant tailwinds for enterprises like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) with gold-rich properties that are progressing towards the production phase.
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