Gold Price Outlook: Goldman Sachs Recommend To 'Go For Gold' - Why And Next Potential Target!

The current environment is risky for commodities, and Goldman Sachs believes gold is the top investment option to offer protection against loss of value. Hence, the global broker says, 'Go For Gold'. So far in 2024, gold prices have continued to glitter despite economic uncertainty and geopolitical tensions. The uptrend is likely to continue in 2025 as well, with Goldman Sachs predicting spot gold at $2,700 per ounce in the near term.

Goldman Sachs strongly believes commodities are safer investment options, due to their diversifying roles including hedging returns during supply disruptions. Not to forget, during economic strife, commodities make up the base materials that fuel the engines of society, and hence they're more attractive than compared to equities.

However, the global broker has the highest confidence in gold to stand out among other commodities, and accordingly, expects a price upside in the near term.

Giving rationale to its outlook, Goldman expects the tripling in central bank purchases since mid-2022 on the backdrop of concerns related to US financial sanctions and US sovereign debt to be structural and continue. Additionally, the brokerage added that imminent Fed rate cuts are likely to drive Western capital back into the gold market, a component largely absent of the sharp gold rally observed in the last two years.

Also, if gold prices start to fall significantly, Goldman believes, China would trigger fresh buying in yellow metal, which will act as a safety net against steep selling.

Moreover, as per Goldman, gold offers significant hedging value to portfolios against geopolitical shocks including tariffs, Fed subordination risk, and debt fears.

"Our analysis suggests an upside of 15% in gold prices under a hypothetical rise in financial sanctions equal to the rise seen since 2021 and a similar upside if US CDS spreads widen by 1," they wrote. "That said, due to the particularly price-sensitive Chinese market digesting the recent price rally, we have adjusted our $2,700 target to early 2025 vs year-end 2024 previously. However, we believe that that same price sensitivity also insures against hypothetical large price declines, which would likely reinvigorate Chinese buying," Kitco cited Goldman's report.

So far, in 2024, spot gold has soared by double-digit 21%, with its fresh all-time high at $2,532.05 per ounce that was recorded on August 20. Currently, the price of XAU/USD (Gold Spot US Dollar) is around $2,490 per ounce level.