Goldman Sachs predicts gold prices could reach $4,000 per ounce, and claims gold is the safest heaven against weakening the dollar. According to the agency, gold overtakes both Bitcoin and Silver in the process.
Recalling that investors sold gold and turned into financial debt over the years when US interest rates rose, Goldman Sachs commodity strategist Lina Thomas says the relationship worsened after Russia invaded Ukraine in February 2022.
According to Thomas, the development was a warning, especially for the central bank. “If foreign politicians can freeze their assets, these assets are no longer truly risky.”
This uncertainty environment has led central banks around the world to increase their gold purchases, according to Goldman Sachs analysis. Purchases of an average of 17 tons per 17 tons before 2022 reached 22 tons and 94 tons of the Ukrainian War by 2025. Major producers, especially China and Russia, have been transformed into gold. China aims to convert 20% of its reserves into gold.
Goldman Sachs says this rapid rise in demand could boost gold prices by almost 30%, pushing them up to around $4,000 to $4,000. Gold has low volatility and low correlation with stocks, making it attractive for investors. “Bitcoin and gold also provide inflation protection due to limited supply, but gold is a more robust choice because it is less volatile and does not correlate with tech stocks.”
Bitcoin's link to tech stocks and its high volatility puts a high risk in the economy. This explains why central banks save money, not bitcoin or silver.
As for silver, Thomas points out three main reasons: Silver oxidizes over time and loses its value, is much larger than gold and is difficult to transport, and is not considered a reserve asset by the IMF. “Silver is outside the scope of the central bank. It's like industrial metals.”
According to Goldman Sachs, the gold market is only 0.5% of the stock market, so even a small gold allocation in the portfolio can lead to a big price movement.
Thomas' final message: “Gold is no longer a historic relic. Gold renews confidence in the face of dollars that have lost the trust of macro investors.”
*This is not investment advice.
