Gold prices may soar to $5,000 amid political interference – Goldman Sachs

By Praisebell Rosemond Larbi

Investment bank Goldman Sachs has warned that gold prices could climb to unprecedented levels of USD5,000 per troy ounce if political interference in U.S. monetary policy accelerates under President Donald Trump’s administration.

In a research note issued on Wednesday, the bank reaffirmed gold as its “highest-conviction long recommendation,” citing ongoing geopolitical and financial uncertainties, strong central bank demand and the growing appeal of the metal as a hedge against institutional risk.

Spot gold prices hit a record high of USD3,578.50 per ounce this week, as expectations of a U.S. Federal Reserve interest rate cut later this month and concerns over global economic stability continued to fuel safe-haven demand.

Baseline and Upside Scenarios

Goldman Sachs projects gold to reach USD3,700 by the end of 2025 and 4USD,000 by mid-2026, underpinned by sustained central bank buying, particularly from emerging markets seeking to diversify reserves away from the U.S. dollar.

However, analysts cautioned that this baseline forecast does not account for a possible surge in private investor reallocation from U.S. dollar assets into gold.

In such a scenario, the bank sees upside potential as high as USD4,500 per ounce.

The most dramatic outlook would emerge if political meddling weakened the independence of the U.S. Federal Reserve. According to Goldman Sachs, a loss of Fed autonomy could drive higher inflation, rising long-term bond yields, weaker equities and erosion of the dollar’s status as the world’s reserve currency.

In that environment, gold could become the ultimate safe haven, propelling prices toward USD5,000 per ounce.

Political Pressure on the Fed

President Trump has intensified efforts to exert greater control over the Federal Reserve, raising alarm among investors about the institution’s ability to set interest rates independently of political considerations.

Economists widely regard central bank independence as essential for managing inflation and preserving financial stability.

Goldman Sachs warned that any perception of weakened Fed credibility could accelerate a shift out of dollar-denominated assets into alternative stores of value, with gold the primary beneficiary.

Investor Flows Could Be Game-Changing

The bank estimated that if just 1 per cent of the private money currently invested in the U.S. Treasury market were diverted into gold, it would be sufficient to drive prices close to USD5,000 per ounce.

With global tensions, fiscal deficits and currency realignment already pressuring traditional asset classes, analysts argue that the conditions for a structural revaluation of gold are firmly in place.

“Gold is not reliant on institutional trust,” the note emphasised, adding that in a world of heightened political and economic risk, its role as a store of value is only set to grow.