Goldman Sachs Raises 2025 Gold Price Forecast to $2,900

Goldman Sachs on Monday increased its gold price forecast for early 2025 to $2,900 per troy ounce (toz), up from its previous estimate of $2,700/toz, citing two key factors driving the upward revision.

First, the investment bank expects a quicker decline in short-term interest rates in Western countries and China. They noted that the gold market has not yet fully accounted for the boost these rate reductions will provide to Western exchange-traded funds (ETFs) backed by physical gold, which tends to be gradual.

Second, Goldman highlighted the ongoing strong demand for gold from emerging market (EM) central banks, particularly in the London over-the-counter (OTC) market. The firm’s strategists believe that “these purchases will remain structurally elevated” and will continue to fuel the gold rally that began in 2022.

Goldman’s nowcasting tool, which tracks real-time monthly data, shows robust demand from central banks and institutions in the London OTC market. As of July, annualized purchases averaged 730 tons, representing about 15% of global annual gold production estimates. China has been a significant driver of this demand, with the nowcast providing data similar to those from the World Gold Council (WGC), but with added benefits such as monthly updates, country-specific transparency, and data informed by customs reports and institutional expertise.

The bank reaffirmed its long-term recommendation to invest in gold, citing the expected gradual benefit from lower global interest rates, sustained central bank demand, and gold’s traditional role as a hedge against geopolitical, financial, and economic risks.

Gold prices remained just below their all-time high on Tuesday, following U.S. Federal Reserve Chair Jerome Powell’s comments downplaying the likelihood of significant rate cuts this year. Powell indicated that the Fed will likely proceed with smaller quarter-point rate cuts, emphasizing that the central bank is “not in a hurry” to reduce rates, amid positive signs of economic growth and strong consumer spending. Investors are now closely watching upcoming labor data for further insights.