Gold To Reach $2700 in a Few Months – Gold has long been considered a safe investment during tough economic times. According to Goldman Sachs, gold offers the best protection against losing value compared to other commodities.
While commodities typically serve as the foundation for society’s needs, the current market poses risks for many popular options. Goldman Sachs highlights that, despite these risks, gold stands out as the commodity with the highest potential for growth.
In their recent commodities update, Goldman Sachs analysts stated, “We strongly believe in the diversifying role of commodities in investment portfolios.” They emphasize how commodities can hedge against supply disruptions, especially in the energy sector. The analysts also see the potential for significant increases in specific industrial metals due to demand for green technologies.
Focus on Gold
Despite closing several commodity-focused investments, Goldman Sachs remains optimistic about gold. They predict that gold will reach a price of $2,700 per ounce by early 2025. Analysts provided three main reasons for this bullish outlook.
First, central bank purchases of gold have tripled since mid-2022. This trend is driven by concerns about U.S. financial sanctions and sovereign debt. The analysts believe that this demand will continue.
Second, they expect the Federal Reserve to cut interest rates soon. This could attract more Western capital back into the gold market, which has been missing during recent price rallies.
Third, gold provides valuable protection against geopolitical risks. This includes threats from tariffs and fears surrounding national debt. Goldman Sachs indicates that gold prices could rise by 15% if financial sanctions increase as they did in 2021.
Adjusting Targets
Initially, Goldman Sachs aimed for a $2,700 target by the end of 2024. However, they adjusted this to early 2025 due to the sensitivity of the Chinese market to recent price hikes. Nevertheless, they believe this price sensitivity also protects against large price drops, which could lead to increased buying from China.
Central banks have shown a strong interest in gold recently. In the first half of 2024, global net gold purchases reached a record 483 tonnes. This amount surpassed the previous record of 460 tonnes set in the first half of 2023. In the second quarter alone, central banks bought 183 tonnes, marking a 6% increase compared to the previous year.
Gold To Reach $2700 in a Few Months – Questions and Challenges
Despite these positive trends, some experts are questioning the current market situation. The Kobeissi Letter noted the apparent contradiction between central banks’ “soft landing” predictions and their significant gold purchases.
Goldman Sachs remains optimistic as we approach the end of 2024 and the start of 2025. However, they acknowledge that September has historically been a challenging month for gold prices. Nevertheless, with governments continuing to print money, the demand for gold is likely to remain strong.
As central banks stock up on gold, it seems the yellow metal’s value may continue to rise in the coming months, fueled by ongoing concerns about currency debasement and economic instability.
Chart by Trading View
