Goldman Sachs reaffirmed its positive outlook on gold in a report released Monday, citing the potential for Federal Reserve rate cuts and persistent demand from China as key factors driving gold prices to new highs. This optimistic stance persists despite the backdrop of rising U.S. interest rates, which typically exert downward pressure on gold prices.
The brokerage highlights that while the Chinese market is sensitive to price shifts, structural changes are contributing to what it describes as an “unshakeable bull market” for gold in China. Factors such as lower interest rates and increasing economic uncertainties are fueling demand, even though higher prices are starting to dampen jewelry purchases.
Furthermore, China’s central bank has significantly increased its gold reserves in recent months, accumulating hundreds of tonnes. Analysts attribute these substantial acquisitions to concerns over U.S. financial sanctions and the stability of U.S. sovereign debt.
Goldman Sachs notes the importance of central bank gold purchases, which have surged threefold since mid-2022. The firm remains confident in long gold positions, maintaining its bullish forecast of $2,700 per ounce for 2025, representing a 12% increase from current spot prices.
The anticipated return of Western capital to the gold market, driven by potential Fed rate cuts, further enhances the long-term prospects for gold. Despite possible short-term fluctuations in Chinese demand due to price sensitivity, the overall outlook for gold remains highly positive.
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