Goldman Sachs has projected a substantial increase in gold prices for the coming year, driven by heightened central bank acquisitions and expected reductions in U.S. interest rates.
What Happened: Goldman Sachs has identified gold as a leading commodity trade for 2025, with prices anticipated to reach $3,000 per ounce by December 2025. Analysts, including Daan Struyven, pointed to increasing demand from central banks as a key driver of this forecast, Bloomberg reported on Monday.
"Go for gold," analysts said in a note.
They also foresee a cyclical boost from rising investments in exchange-traded funds (ETFs) as the Federal Reserve enacts rate cuts. Additionally, geopolitical risks, particularly concerning Iran, could influence oil supply due to potential increased U.S. support for Israel and stricter sanctions enforcement.
Gold ETFs have demonstrated robust performance in terms of year-to-date (YTD) returns, as per Benzinga Pro. SPDR Gold Trust (NYSE:GLD) has risen 24.05%, iShares Gold Trust (NYSE:IAU) increased by 24.22%, SPDR Gold MiniShares Trust (NYSE:GLDM) climbed by 24.38%, abrdn Physical Gold Shares ETF (NYSE:SGOL) gained 24.29%, and iShares Gold Trust Micro (NYSE:IAUM) advanced 24.08% year-to-date.
Why It Matters: The forecast by Goldman Sachs comes amid significant movements in the gold market. In October, the SPDR Gold Trust (GLD), the largest physically backed gold ETF, experienced its highest monthly inflows in 2.5 years earlier this month, driven by economic and policy uncertainties surrounding the U.S. presidential election. This influx pushed the fund's assets under management to $79.7 billion by the end of October, with $1.8 billion in net inflows for the month.
However, the sentiment shifted dramatically after Donald Trump's election victory, leading to a $1 billion outflow from the SPDR Gold Trust (GLD) in early November. This marked the largest weekly outflow in over two years, as investors moved away from the safe-haven asset, anticipating a strong dollar under Trump's second term.
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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