- Goldman Sachs forecasts gold surging back to $5,400 before the end of the current year.
- A primary catalyst remains the ongoing conflict between the US and Iran, which is causing a massive disruption in the global oil supply line.
Macro forces continue to subdue gold prices. However, American multinational investment bank Goldman Sachs believes it will see a major rebound to $5,400 per ounce by year-end.
Catalyst for Gold’s Huge Rebound
According to Lina Thomas, Senior Commodities Strategist at Goldman Sachs, and Daan Struyven, Co-Head of Global Commodities Research at the bank, gold prices will remain anchored to economic and geopolitical tensions stemming from the Middle East conflict. The same event that drove the precious metal’s price down will also be the catalyst for its gradual recovery.
Gold notably corrected sharply after reaching an all-time high of around $5,600 in January this year. Just when it appeared to be positioning itself for another upward shot, the USA and Israel’s attacks on Iran rattled markets, and the initial shock triggered a massive selling pressure on the precious metal. The analysts saw parallels between gold’s reaction during the supply-disruption episodes in 2022 and the recent shock in the Arabian Peninsula.
The asset collapsed to its lowest this year, roughly $4,100, a week ago, and has moved sideways at around $4,400 to $4,600 over the last 24 hours heading into Tuesday. Nonetheless, Thomas and Struyven claimed that gold has not lost its safe-haven status, and the longer the crisis drags on, the more it will gain traction. In fact, they see the current figures in the charts as an ideal entry point for long-term investors.
Central Banks Exerting Buying Pressure on Gold
The Goldman Sachs analysts grounded their gold forecast on three scenarios. These include the US Federal Reserve’s normalization of speculative positioning, a possible 50-basis-point rate cut, and a repositioning of its gold-buying strategy. However, they warned investors to be vigilant about possible severe liquidation scenarios that could push the asset’s price below $4,000.
Meanwhile, Peter Schiff, a veteran gold investor and Chairman of Schiffgold, reinforced Goldman Sachs’ bullish outlook. He pointed out that central banks have begun losing confidence in the stability of the US dollar, so many of them have started shifting away from it in favor of gold. He explained that the trend had pushed gold’s price from $2,000 to $5,000 over the past two years.
Unlike Goldman Sachs, though, Schiff projects that gold will surge even without a Fed rate cut. While he insisted on the precious metal’s superiority over Bitcoin (BTC) as a reserve and safe-haven asset, he said tokenization will amplify gold’s tradability, thereby propelling its demand amid shaky macro sentiment.
