Goldman Sachs has given a bullish view on gold prices, estimating that the bullion could approach $5,000 an ounce if investor sentiment is further rattled by any weakening of the Federal Reserve’s independence and a small shift of funds from Treasuries into gold.
The bank’s analysts noted that a loss of Federal Reserve independence could trigger higher inflation, declining stock and long-term bond prices, and undermine the dollar’s standing as the world’s reserve currency. In such an environment, gold stands out as a reliable store of value because it does not depend on trust in financial institutions.
This development came amid growing political pressure on the U.S. central bank, as President Donald Trump sought to remove Governor Lisa Cook and sharply criticized Federal Reserve Chair Jerome Powell for overspending on the renovation of the Fed’s headquarters and acting too slowly on interest rate cuts. Trump even threatened to replace Powell, further fueling concerns over potential challenges to the central bank.
Goldman’s baseline forecast sees gold rising to $4,000 an ounce by mid-2026, with a potential climb to $4,500 in risk scenarios. A move of just 1% of privately-owned U.S. Treasuries into gold could send prices near $5,000 an ounce, assuming other factors remain unchanged. Based on this outlook, the bank continues to view gold as its top long-term investment within commodities.
Recent strength in gold prices has been attributed to increased central-bank buying and expectations that the Fed may soon lower U.S. interest rates, while added market volatility has followed efforts by Trump to influence Fed leadership.
Meanwhile, concerns from global leaders have intensified, with European Central Bank President Christine Lagarde warning that a loss of Federal Reserve independence would pose a “serious danger” to the world.
Leading up to this, spot gold was trading near $3,540 an ounce after touching a new record above $3,578 earlier in the week.
