Gold Prices Could Hit $5,000 If This Happens, Says Goldman

"Gold prices have enjoyed another leg higher in the past few weeks, gaining close to 9% in a month, thanks in part to hope for a dovish tilt in the Federal Reserve as it gets ready to reduce interest rates. Of course, weaker job numbers, pressure on the U.S. dollar, and questions about what the future holds for the Fed's independence have also given the shiny yellow metal a nice shot in the arm after spending much of the summer trading sideways."

"And while many big-name pundits see gold rising to $3,800 in the medium term, which entails another 3% in upside from current levels, Goldman Sachs ( NYSE:GS) actually thinks the metal could be headed to $5,000 per ounce next year if the Fed's independence is compromised. For now, $5,000 per ounce is highly conditional and is more of a bull-case scenario than anything else."

"Indeed, with Fed Governor Lisa Cook's firing blocked for the time being, questions linger as to what could be next as the Trump administration calls for lower interest rates. Indeed, it's hard to know what to make of the matter, but in light of all the question marks at home and abroad, I think it's only prudent to at least have some (perhaps a single-digit percentage) stake in gold as a hedge."

Gold climbed roughly 9% in a month on expectations of a dovish Federal Reserve preparing to cut rates, weaker jobs data, and U.S. dollar weakness. Tariffs and renewed central bank purchases, particularly from China, provided additional support. Geopolitical tensions, including strikes in Qatar, increased safe-haven demand. Major analysts offer divergent targets, with many forecasting about $3,800 medium-term while Goldman Sachs outlines a conditional $5,000-per-ounce bull case if the Fed's independence is compromised. Market uncertainty and potential inflation resurgence during rate cuts create upside risk. A modest single-digit allocation to gold can serve as a hedge.

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