Goldman Sachs Bullish on Gold

Goldman Sachs expressed a bullish stance on gold in a note on Monday, citing key drivers such as potential Fed rate cuts and China’s strong demand, contributing to record-high gold prices. This optimistic outlook persists despite rising US interest rates, which typically lower gold prices.

The brokerage notes that while the Chinese market is sensitive to price fluctuations, structural changes are fostering an “unshakeable bull market” in China. Lower interest rates and rising economic uncertainties are enhancing demand, despite surging prices cooling jewelry purchases.

Additionally, China’s central bank has been actively purchasing gold, accumulating hundreds of tonnes in recent months. Analysts attribute these significant acquisitions to concerns over US financial sanctions and the sustainability of US sovereign debt.

Goldman Sachs highlights the importance of central bank gold purchases, which have tripled since mid-2022. They maintain strong value in long gold positions, projecting a bullish forecast of $2,700 (a 12% increase from current prices) by 2025.

The potential return of Western capital to the gold market, influenced by expected Fed rate cuts, further enhances the optimistic long-term outlook for gold. Although short-term demand fluctuations may occur in the Chinese market due to price sensitivity, the overall sentiment remains positive.