Goldman Sachs Increases 2025 Gold Price Forecast to $2,900 per Ounce

Goldman Sachs has revised its gold price forecast for early 2025, raising the target to $2,900 per troy ounce from the previous $2,700. The investment bank cited two key factors for the increase: the anticipated decline in short-term interest rates and ongoing robust purchases by emerging market central banks.

Decline in Interest Rates Expected to Boost Gold Market

Goldman Sachs expects a faster decline in short-term interest rates in Western countries and China, noting that the gold market has yet to fully account for these changes. The bank anticipates a gradual adjustment in Western ETF holdings backed by physical gold, which could bolster prices.

Emerging Market Central Banks Fueling Gold Demand

Purchases by emerging market central banks in the London over-the-counter (OTC) market are another driving factor. Goldman strategists believe these purchases will “remain structurally elevated,” supporting the rally that began in 2022.

Nowcasting Tool Highlights Strong Gold Purchases

According to Goldman’s nowcasting tool, which provides timely monthly data, central bank and institutional demand for gold in the London OTC market remains strong. As of July, purchases averaged an annualized 730 tons, making up roughly 15% of global annual production. China has significantly contributed to this demand, with estimates aligning closely with those of the World Gold Council (WGC). The tool’s advantages include monthly updates, country-specific transparency, and data-informed by customs and institutional knowledge.

Goldman Sachs Maintains Long-Term Positive Stance on Gold

Goldman Sachs has reiterated its long-term favorable outlook on gold, driven by the gradual boost expected from lower interest rates, sustained demand from central banks, and gold's role as a hedge against geopolitical, financial, and recessionary risks.

Market Response and Economic Outlook

Gold prices were just below their all-time high on Tuesday. U.S. Federal Reserve Chair Jerome Powell recently downplayed the likelihood of significant interest rate cuts in the near term, emphasizing that the Fed is not “in a hurry” to reduce rates. Investors are now awaiting labor market data for further economic insights.