Gold Prices Continue to Rise
Gold prices have experienced a remarkable surge, climbing over 40% since January 2024. According to Goldman Sachs, this rally is far from over. The investment bank forecasts gold hitting fresh all-time highs above $3,000 per ounce. In fact, Goldman analysts upgraded their price target to $3,100 per ounce from its previous estimate of $2,890. As a senior market strategist at RJO Futures summarized it, “I think ultimately we are in a very bullish market, and gold can get much higher than $3,000.”1,2
Central Banks Drive Gold Demand to Record Highs
One of gold’s primary drivers is sustained demand from central banks. Before the freezing of Russian central bank assets in 2022, the average monthly institutional gold demand was around 17 tons. By December of last year, that figure had skyrocketed to 108 tons—an almost fivefold increase. Goldman Sachs said that if central bank demand remains this high, gold prices could go up 9% this year alone.3
“The increased forecast is underpinned by higher-than-expected demand for gold from central banks, which have been increasing their reserves of the commodity since the freezing of Russian central bank assets in 2022, following Russia’s invasion of Ukraine,” the investment bank wrote.4
5
Interest Rate Cuts to Make Gold Even More Attractive
Goldman Sachs also predicts two interest rate cuts in 2025. These cuts could further boost gold’s appeal. Lower interest rates reduce the opportunity cost of holding gold. Non-interest-bearing gold then becomes more attractive compared to interest-generating assets like bonds.
Trade War Fears and Inflation Bolster Gold’s Safe-Haven Status
Market uncertainty surrounding tariffs is another key factor supporting gold prices. Recently, President Trump announced a 25% tariff on imports from Canada and Mexico. He also added an extra 10% tariff on Chinese imports. These moves have sparked fears of a trade war. Which could have serious global economic consequences.
A full-scale trade war can lead to inflation. Increased import costs drive up consumer prices. Historically, gold has been a preferred hedge against inflation. Its value tends to rise when the purchasing power of fiat currencies declines. In addition, a prolonged trade war could weaken economic activity. A recession could be the end result. If inflation and recession occur simultaneously, it could result in stagflation. A scenario where gold is known as an excellent store of value.
Nitesh Shah is Head of Commodities Research at Wisdom Tree. He emphasized gold’s role during stagflation. “If we do head into that recessionary scenario coupled with inflation, that could be a massive boon for gold. From that perspective, gold prices could go substantially higher than they are today.”6
Could Gold Reach $3,300 by 2025?
There are multiple economic and geopolitical uncertainties in play. Analysts have reason to believe gold could climb even higher than current forecasts. Goldman Sachs has outlined several factors that could push gold prices beyond $3,100:
• Increased policy uncertainty or stronger tariffs could send gold to $3,300 per ounce.
• If central bank purchases average 70 tons per month, gold could reach $3,200.
• National debt concerns could drive central banks to swap out U.S. Treasuries for gold, pushing prices to $3,250.
Even the downside risks look tame. If the Fed doesn’t cut rates, Goldman places gold at $3,060 per ounce. This would still mark a 4% increase from today’s prices.7
China’s Expanding Role in the Gold Market
Some models suggest gold is overvalued. But these fail to account for geopolitical uncertainty, central bank demand, and China’s growing role in the gold marketplace. According to Nitesh Shah, gold represents just 5% of China’s total reserves. That is an extremely low figure compared to other major economies.
“That is a tiny amount,” Shah said. “I don’t think the central bank has any other option but to buy more gold.”8
Beyond central bank purchases, Chinese consumer demand for gold is soaring. They are faced with a weakening economy and limited alternative safe investments. Chinese investors are turning to gold as a reliable store of value. This growing demand will provide yet another tailwind for gold prices.
Conclusion
With gold set to rise even higher and economic risks threatening the value of retirement funds, now is the perfect time to consider a Gold IRA. A self-directed Gold IRA allows you to hold physical precious metals within a tax-advantaged retirement account. It can provide both wealth protection and long-term financial security.
To learn more about how a Gold IRA can help safeguard your financial future, call American Hartford Gold today at 800-462-0071.
