Key points
- Goldman Sachs predicts gold could hit $5,000 per ounce under specific conditions.
- This scenario hinges on a loss of Federal Reserve independence and a shift in investor holdings from Treasuries to gold.
- A baseline forecast projects gold reaching $4,000 per ounce by mid-2026.
- Increased central bank gold accumulation and anticipated Federal Reserve interest rate cuts are driving the current gold price increases.
Gold prices could skyrocket to nearly $5,000 per ounce if the Federal Reserve loses its independence and investors shift even a small portion of their Treasury holdings into gold, according to a new report from Goldman Sachs. Analysts at the investment bank highlight a scenario where diminished Fed autonomy leads to increased inflation, depressed stock and bond prices, and a weakening US dollar.
In this environment, gold, viewed as a reliable store of value independent of institutional trust, would likely benefit significantly.
Goldman Sachs presented various price projections. Their baseline forecast anticipates a gold price of $4,000 per ounce by mid-2026. A more pessimistic, “tail-risk” scenario predicts a price of $4,500. However, the most dramatic prediction comes from a hypothetical shift of just 1% of privately-owned US Treasury holdings into gold, which could propel prices to nearly $5,000 per ounce, assuming all other factors remain constant.
The current surge in gold prices, which has exceeded a third increase year-to-date and reached record highs this week, is driven by several factors. Central banks globally are actively accumulating gold reserves. Furthermore, market speculation anticipates the Federal Reserve will soon begin lowering interest rates.
These trends have gained further momentum amidst recent political actions challenging the Fed’s independence, including President Trump’s attempts to exert more control over the institution.
Adding weight to these concerns, prominent global figures, such as European Central Bank President Christine Lagarde, have voiced alarm over the potential dangers of a compromised Federal Reserve.
The Goldman Sachs report, titled “Diversify Into Commodities, Especially Gold,” while acknowledging these events, refrains from explicitly discussing them in detail. However, the report firmly recommends gold as its highest-conviction long position within the commodities market.
