Money flows in, gold price increases, expected to break the peak

“We reiterate our long-term gold buy recommendation driven by lower global interest rates, higher central bank demand and gold’s benefits as a hedge against geopolitical, financial and recession risks,” the bank said in a note.

Goldman Sachs also raised its 2024 average gold price forecast from $2,357/ounce to $2,395/ounce and its 2025 outlook from $2,686/ounce to $2,973/ounce.

“Our current forecast of central bank and other institutional demand in the market suggests that purchases will remain strong through July, averaging 730 tonnes per year,” Goldman wrote.

Analysts say central bank buying will be the main driver of gold prices rising to $2,900 an ounce by early 2025. In addition, increased inflows from exchange-traded funds after the US Federal Reserve (FED) cut interest rates also boosted gold prices.

This is a significant upgrade for the precious metal, as less than a month ago, Goldman Sachs was forecasting $2,700 an ounce from Q4 2024 to Q1 2025.

“Gold stands out as the commodity where we have the highest near-term upside,” Goldman Sachs wrote in the update.

At the time, they said they maintained their bullish price target of $2,700/ounce by early 2025 and issued a buy recommendation for gold for three reasons.

First, the analysts said they “believe the central bank’s tripling of purchases from mid-2022 on concerns about US financial sanctions and US sovereign debt will continue.”

Second, they said, “the upcoming Fed rate cut will bring Western capital back into the gold market.”

Ultimately, the analysts said gold “offers significant hedge value to portfolios against geopolitical shocks including tariffs, Fed dependency risks and debt concerns.”

Spot gold prices rose steadily overnight. At the time of writing (9:20 a.m. on October 2, 2024), spot gold was trading at $2,660.58/ounce on Kitco.