Goldman Sachs predicts could reach as high as $3,880 per ounce in 2025.
Gold has outperformed the stock markets and this year, rising 27% to $3,351 per ounce as of May 26. And many analysts believe the 2025 gold rush is not over yet.
Recently, Goldman Sachs increased its price target for gold to $3,700 by the end of 2025, which would be another 10% jump on top of the 27% YTD gain.
And over the next 12 months, strategists at JP Morgan projected that gold could hit $4,000 per ounce in the second quarter of 2026.
Gold is seen by investors as a safe haven, and is typically more sought after during recessionary periods, or when stock markets are struggling. Through the first four months of 2025, those two factors drove the price of gold higher.
But stocks have rallied since mid-April, and that coincided with a drop in the price of gold from an all-time high of about $3,433 on May 6 down to about $3,200 after China and the U.S. put a 90-day pause on their trade war.
Since then, gold has bounced back, fueled by several factors. Among them are uncertainty around the federal budget, the lack of progress on negotiations with Europe on tariffs, culminating in President Donald Trump recommending 50% tariffs on the EU, and perhaps the realization that even the 10% tariffs will start to have an impact on prices and the economy.
Will these and other factors persist and drive the price of gold higher? Goldman Sachs researchers believe so.
Central Banks Buying More Gold
In addition to expectations for economic uncertainty and continued market volatility, Goldman Sachs sees other reasons for gold pushing higher. One is increased demand from central banks.
Central banks around the world have some $12 trillion in foreign exchange reserves, which they hold for a variety of reasons, from guarding against inflation to protecting their own currency if it comes under stress.
According to Goldman Sachs, central banks have been buying more gold, particularly since the freezing of Russian assets in Europe.
“They can keep the metal in their own vaults on their own territory, out of reach of other institutions and governments around the world,” Goldman Sachs researchers wrote in a recent analysis called, Why Gold Prices Are Forecast to Rise to New Record Highs. “Since 2022, central bank purchases of gold on the London over-the-counter market have increased fivefold, according to Goldman Sachs Research.”
Goldman Sachs said the U.S., Germany, France and Italy have more than 70% of their reserve in gold, while emerging markets are also playing catchup and buying more gold.
“Central banks are structurally raising the floor under prices by steadily reducing the amount of gold available for trading in the market,” said Lina Thomas, commodities strategist at Goldman Sachs. “As a result, even during corrections, the new lows are higher than where prices were just a few weeks earlier.”
Interest Rates and ETFs
Another factor that could drive gold prices higher is an expected decrease in interest rates, as gold typically becomes more attractive to investors when interest rates go down. This, in turn will lead to more investments in gold ETFs.
“We are seeing a steep ramp-up in ETF holdings, beyond the level that an interest rate model would imply, as investors worry about a potential recession,” Thomas said.
Gold ETFs currently have about $294 billion of assets under management, with pensions and individual investors holding the bulk of investments in gold ETFs.
“[G]old prices have historically been correlated with interest rates,” the Goldman Sachs analysis stated. “More recently, central bank buying has caused the two to diverge, but Thomas says the influence of interest rates hasn’t disappeared entirely. While ETF holdings tend to track interest rates closely, they often overshoot significantly when recession fears grow.”
While Goldman Sach’s target is $3,700 by the end of the year, the price would go as high as $3,880 if there is a recession.
“While the key factor since 2022 used to be central bank buying alone, ETF investors are now joining the gold rally,” Thomas said. “As both compete for the same bullion, we are expecting gold prices to rise even further.”
