Background on Goldman Sachs and its Relevance
Goldman Sachs, a prominent American investment bank, has recently forecasted that gold futures could surge close to $5,000 by mid-2026. This prediction hinges on the possibility of former President Donald Trump’s ongoing campaign against the Federal Reserve (Fed) successfully eroding public trust in the institution.
Goldman Sachs’ Base Scenario
In their base scenario, Goldman Sachs anticipates that the gold price will rise to $4,000 by mid-2026 from its current level near $3,600. This projection assumes that the Fed’s independence is compromised.
The bank argues that a diminished Fed would likely lead to increased inflation, falling stock and long-term bond prices, and a deteriorating status for the US dollar as a reserve currency. Conversely, gold is an asset that doesn’t rely on institutional confidence.
More Pessimistic Scenarios
A more pessimistic scenario suggests that the gold price could drop to $4,500. However, in the worst-case scenario, gold’s price could plummet to $5,000 if just 1% of privately held US Treasury bonds shifted towards gold in search of greater security.
Goldman Sachs explains, “If 1% of the private market for US Treasury bonds were allocated to gold, the price of this precious metal could soar nearly to $5,000 per ounce, assuming all other factors remain constant.”
Key Questions and Answers
- What is Goldman Sachs’ main prediction regarding gold prices? Goldman Sachs predicts that gold could reach nearly $5,000 per ounce by mid-2026 if Donald Trump successfully undermines the Federal Reserve.
- What factors does Goldman Sachs consider in its gold price projection? The bank takes into account the potential erosion of public trust in the Federal Reserve, increased inflation, falling stock and long-term bond prices, and a deteriorating US dollar status as a reserve currency.
- What would happen if 1% of privately held US Treasury bonds moved towards gold? According to Goldman Sachs, this shift could drive the gold price close to $5,000 per ounce.
