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<ul class="summary-list"><li>Goldman Sachs projects the price of gold will climb 8% to $3,000 an ounce by the end of 2025.</li><li>They cite central bank buying, Fed rate cuts, and continued safe-haven interest as reasons.</li></ul>A <a target="_blank" href="https://markets.businessinsider.com/commodities/gold-price?utm_medium=ingest&amp;utm_source=markets">gold</a>-buying spree has turned the <a target="_blank" href="https://markets.businessinsider.com/news/commodities/gold-price-record-high-became-etf-interest-rates-trump-costco-2024-10">yellow metal into one of this year's hottest investments</a>.Though the commodity has already soared more than 30% year-to-date, Goldman Sachs anticipates that there's even more upside in store next year.In a note published Tuesday, the bank projected that gold will reach $3,000 an ounce by the end of 2025, implying an 8% increase from its current price.It offered three reasons for the forecast:First, high demand from central banks will continue, though Goldman does expect gold buying to slow next year.Central banks have sought gold with new intensity since Western sanctions were placed on Russia for its invasion of Ukraine. Some countries treated this as a lesson to diversify reserves away from the greenback, prompting high demand for the bullion metal."We assume that central bank purchases will moderate to a monthly pace of 30 tons — about a third of the elevated 85 tons average monthly pace observed since 2022, but structurally higher than the 17 tons monthly average pace before the freezing of Russia's reserves—by end-2025," analysts wrote.<div type="image" title="Chart showing the surge in central bank gold purchases since 2022" height="1310" width="2192" msid="114820099" hostid="261" sizebytes="75042"></div>Second, easing US interest rates will gradually boost Western ETF holdings backed by gold.Goldman expects the Federal Reserve to reduce the fed funds rate to the 3.25%-to-3.5% range midway through 2025. Since the gold doesn't yield interest, easing monetary policy typically boosts gold's competitiveness. When rates are high, the commodity loses out against other interest-bearing assets.In a September note, Goldman found that gold-backed ETFs rise gradually for a six month period as rate cuts occur. This boost matters to the price of gold since rising ETF holdings bear down on the physical supply of the metal.Third, <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/gold-safe-haven-treasurys-us-national-debt-bofa-fiscal-expansion-2024-10">safe haven investors</a> will have more reason to keep piling into gold.Goldman said speculative positioning has risen to high levels over geopolitical and inflationary concerns. The bank anticipates that this could normalize as uncertainty softens gradually after the election, which could prompt some near-term downside risk to the price of gold.However, analysts wrote that gold will remain an attractive hedge in the long term amid a potential escalation of new tensions. These include <a target="_blank" href="https://markets.businessinsider.com/news/stocks/trump-tariffs-china-election-consumer-stocks-earnings-ubs-2024-10">trade disputes</a>, threats to the <a target="_blank" href="https://www.businessinsider.com/interest-rate-cut-trump-fed-powell-reaction-independence-history-2024-9">Fed's independence</a>, <a target="_blank" href="https://www.businessinsider.com/harris-trump-fix-national-debt-how-to-invest-portfolio-protection-2024-10">US debt fears</a>, and the chance of a future recession.

3 reasons why surging gold prices will climb another 8% by the end of 2025, Goldman says

<ul class="summary-list"><li>Goldman Sachs predicts gold prices will hit $2,900 per troy ounce by early 2025.</li><li>Falling interest rates and high demand from central banks in emerging markets drive this rise, Goldman said.</li></ul>The price of <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/gold-price">gold</a> is set to extend its record-setting rally to new highs by early 2025, according to a note from <a target="_blank" class="" href="https://markets.businessinsider.com/stocks/gs-stock">Goldman Sachs.</a>Aside from <a target="_blank" class="" href="https://www.businessinsider.com/us-warns-severe-consequences-for-iran-after-attack-on-israel-2024-10">rising geopolitical tensions,</a> which tend to favor safe-haven assets like gold, two other factors should help drive further upside for the commodity.Those factors are falling interest rates and what appears to be an insatiable demand for the precious metal from central banks in emerging market countries.Goldman boosted its gold price target to $2,900 per troy ounce from $2,700, representing upside of about 9% from current levels.Such gains would come after gold prices have already rallied 29% year-to-date."We reiterate our long gold recommendation due to i) the gradual boost from lower global interest rates, ii) structurally higher central bank demand, and iii) gold's hedging benefits against geopolitical, financial, and recessionary risks," Goldman Sachs' Lina Thomas said.Goldman highlighted that the central banks of emerging market countries like China are behind the structural advance of gold prices since 2022.The bank estimates that institutional demand for the precious metal in the London OTC market has been strong through July, with year-to-date purchases averaging an annualized rate of 730 tons.That represents about 15% of global annual production estimates."Moderating but still significant central bank purchases on the London OTC market drive about 2/3 of the expected rise of the gold price to $2,900/toz in early 2025," Thomas said.In addition to lower interest rates and solid demand from central banks, gold should be top of mind for investors given the numerous risks in markets right now: an upcoming Presidential election, the potential outbreak of war between Israel and Iran, and <a target="_blank" class="" href="https://www.businessinsider.com/port-strike-could-wreck-us-economy-with-price-increases-scarcity-2024-10">economic uncertainty over the East Coast port strike.</a>

2 big reasons gold prices are set to surge 9% by early next year, according to Goldman Sachs

<ul class="summary-list"><li>The price of spot gold topped $2,500 per ounce on Friday, a new all-time high.</li><li>The metal is rising on confidence that interest-rate cuts are imminent.</li></ul>The price of spot <a target="_blank" href="https://markets.businessinsider.com/commodities/gold-price?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">gold</a> climbed past $2,500 an ounce to a new record on Wednesday.The precious metal has rallied more than 20% this year on anticipation that interest rates could eventually ease. Since gold offers no yield, traders consider it a better investment when central banks slash rates.For this same reason, spot gold jumped as much as 1.8% on Friday as fresh housing data gave investors renewed reason to bet on lower interest rates.In July, new home starts dropped to their <a target="_blank" href="https://www.businessinsider.com/housing-market-outlook-new-home-construction-builder-confidence-covid-low-2024-8">lowest level since 2020</a>, the Commerce Department reported. This finding adds on to concerns over the economy's strength, especially after recent weakness in inflation and labor prints.These reports have raised questions about whether interest rates are too restrictive. To reverse this, <a target="_blank" href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html">markets project</a> that the Federal Reserve will ease policy by at least 25 basis points next month.Last month, JPMorgan forecast that Fed cuts would extend the gold rally but predicted that gold would hit the $2,500 mark in the fourth quarter.Some analysts have raised their outlooks for where the bullion metal could be headed in the long term.According to Alex Kuptsikevich, senior market analyst at FxPro, gold could eventually trade between $2,800 and $2,900. That's based on how the metal moved from a bottom in October 2022 through September 2023, he wrote on Friday.Separately, Trade Nation senior market analyst warned that profit-taking could come, pulling gold down to trade in the $2,450 range.While interest rate outlooks have been a central rally driver, persistent geopolitical and domestic tensions have fanned the bull run. The bullion metal is a reputed safe-haven commodity that garners investments when risk and uncertainty are high.This year, military conflicts in Europe and the Middle East have contributed to this, while the possibility of a second Donald Trump presidency <a target="_blank" href="https://markets.businessinsider.com/news/commodities/gold-price-all-time-high-fed-rate-cuts-trump-presidency-2024-7">has also sent gold higher</a>, sources told the Financial Times in July.Upside momentum in the metal has been steady through this month, moving in line with equities, Kuptsikevich said. Worth noting, however, is that the yellow metal experienced a less aggressive drop during the stock market's August sell-off, outpacing the rally.

Why gold prices just hit a new record

<ul class="summary-list"><li>Gold prices hit a fresh record high — above $2,500 an ounce — on Friday.</li><li>Gold prices have risen about 20% this year thanks to central bank buying and geopolitical and economic uncertainties.</li></ul>Gold prices have been on a tear, hitting a <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/spot-gold-record-price-fed-interest-rate-cuts-safe-haven-2024-8">record high on Friday</a> — and they could gain further.The yellow metal has been boosted by a combination of factors, including active <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-usd-strong-china-pboc-central-banks-buy-gold-inflation-2024-5">central bank buying,</a> and has surged about 20% this year.Prices have, in fact, been in an "uninterrupted rally" from a low of $1,810 an ounce in October, wrote Ole Hansen, the head of commodity strategy at Denmark's <a target="_blank" href="https://www.home.saxo/content/articles/commodities/resilient-gold-bulls-drive-price-to-fresh-record-above-usd-2500-19082024">Saxo Bank,</a> in a Monday note.This means that a <a target="_blank" class="" href="https://www.lbma.org.uk/publications/good-delivery-rules/technical-specificationshttps://www.lbma.org.uk/publications/the-otc-guide/london-good-delivery-gold-and-silver">standard-size gold bar</a> of about 400 troy ounces — like those featured in gold heist movies — now cost over $1 million each.The <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/gold-price">spot gold price</a> is just shy of $2,500 an ounce now, up about 21% so far this year.One big factor driving the market's expectation for higher gold prices is a potential Federal Reserve interest rate cut, following slower-than-expected <a target="_blank" class="" href="https://www.businessinsider.com/inflation-consumer-price-index-in-july-fed-interest-rates-2024-8">July inflation </a>data and higher <a target="_blank" class="" href="https://www.businessinsider.com/unemployment-rate-job-growth-july-labor-market-economic-data-2024-7">unemployment</a> figures.Investors will be scrutinizing Fed Chair Jerome Powell's keynote at the central bank's annual symposium at <a target="_blank" class="" href="https://www.businessinsider.com/fed-interest-rate-cute-powell-jackson-hole-signal-us-economy-2024-8">Jackson Hole, Wyoming,</a> on Friday, for cues on what the central bank might do next.Now, "the question now is how big will the rate cut be?" wrote Daniela Sabin Hathorn, a senior market analyst at Capital.com, in a Monday note.If Powell does signal a larger rate cut — for example, a 50 basis point, or 0.5% percentage point, cut — it could feed into higher gold prices.A fall in US interest rates typically depresses bond yields and the greenback, in turn driving investment into gold, which is internationally denominated in the dollar.Furthermore, a larger rate cut would "allude to greater concerns about economic recession by the central bank," wrote Hathorn.A key reason central banks cut rates is because they want to stimulate lending and in turn, economic activity.As a time-tested store of value, gold prices would likely rise on fears of recession.<h2 id="c66e64bc-e8b0-4be2-8a1c-f43d2f29c7e7">Geopolitical risks boost appetite for gold</h2>Other than monetary policy, heightened geopolitical risks are also boosting the appeal of gold, a traditional safe haven.Risks include the wars in Ukraine, the Middle East, and the November US presidential election, wrote Saxo Bank's Hansen.The US presidential election is a cause for concern because both candidates are "prepared to spend money they haven't got, thereby lifting the US debt levels further," Hansen added.<a target="_blank" class="" href="https://www.businessinsider.com/gold-price-china-consumers-central-bank-pboc-economy-concerns-dedollarization-2024-4">In China,</a> consumers are also snapping up gold to preserve value amid a depressed economic environment, an epic property crisis, and a weak currency."Continued central bank demand amid geopolitical uncertainty and <a target="_blank" class="" href="https://www.businessinsider.com/dedollarization-usd-strong-china-pboc-central-banks-buy-gold-inflation-2024-5">de-dollarization,</a> and not least gold's ability to offer a level of security and stability that other assets may not provide" would give support to the yellow metal, wrote Hansen.

Here's why gold prices could climb even higher from current record levels     

<ul class="summary-list"><li>The precious metal climbed over $2,465 on Tuesday, eclipsing its record high reached in May.</li><li>Hopes for a September rate cut are sending gold higher, JPMorgan said.</li></ul>The price of <a target="_blank" href="https://markets.businessinsider.com/commodities/gold-price?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">gold</a> pushed past its all-time high on Tuesday, as the Federal Reserve and Donald Trump help boost the metal.Prices surged 1.77% as of 2 p.m. ET, reaching over $2,465 per ounce. The fresh high outpaced the peak in May of $2,450 per ounce, and comes as the metal has climbed 6% this month.According to JPMorgan, that's because rising confidence in lower interest rates is a boon for gold: the metal is a non-interest bearing asset, and outperforms when rates eventually fall.The bank expects the Fed to slash rates starting in September, joining a chorus of similar Wall Street forecasts. Encouraging the outlook was June's benign consumer price index report, which saw inflation decline 0.1% month-to-month."Our analysts remain bullish on gold prices into year-end, seeing prices rising towards $2,500/oz in 4Q24 as the onset of a Fed cutting cycle restokes western investor demand via both futures and ETF holdings, driving the next leg higher in prices," JPMorgan said.Last week's gold market inflows reached their highest in eight weeks, totaling $10.9 billion, the bank said.Meanwhile, the <a target="_blank" href="https://think.ing.com/articles/gold-monthly-the-bull-run-is-not-over-yet/">looming US election</a> has also become a factor in gold's uptick.Sources told <a target="_blank" href="https://www.ft.com/content/e9231adf-8f08-4dea-824c-b9723dc5d866">The Financial Times</a> that a second Trump term is a chief tailwind for gold. The metal might seem more appealing amid Trump's tariff and tax policies, they said, which could <a target="_blank" href="https://www.businessinsider.com/trump-economic-outlook-recession-inflation-china-tariffs-biden-president-election-2024-3">boost inflation</a> and deepen the budget deficit.In a note, UBS added that near-term political uncertainty could create market swings that make gold more attractive, amplifying its role as a safe haven asset.For now, technical measures indicate growing upside momentum for gold, with no signs of overbought levels, Trade Nation's David Morrison wrote on Tuesday."Yet buyers could decide to exercise some caution, given the sudden price plunges that have appeared to come out of nowhere," the senior market analyst said. "We've seen these on several occasions, most recently in April, May and June."

Gold price hits an all-time high as bets on rate cuts and a Trump win fuel the precious metal

<ul class="summary-list"><li>Gold reached a record of $2,454.20 per ounce on Monday as markets priced in Fed rate cuts.</li><li>The consensus estimate on Wall Street is two 25-basis-point reductions this year.</li></ul><a href="https://markets.businessinsider.com/commodities/gold-price?utm_medium=ingest&amp;utm_source=markets&amp;utm_medium=ingest&amp;utm_source=markets">Gold</a> set another record on Monday as Wall Street readies for monetary policy to ease this year.The yellow metal notched an intraday record of $2,454.20 per ounce. This upside momentum comes as investors grow open to the possibility of interest-rate cuts this year. Since gold is a non-interest-bearing asset, it typically outperforms when rates fall.Rate-cut sentiment shifted after April's cooler-than-expected consumer-price-index report, marking an upward inflection point in the price of gold and putting <a href="https://www.businessinsider.com/stagflation-us-economy-recession-outlook-forecast-q1-jobs-report-labor-2024-5" target="_blank" rel="noopener">March's worryingly hot inflation prints</a> in the rearview.Now futures markets are back to expecting <a href="https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html" target="_blank" rel="noopener">two 25-basis-point cuts this year</a>, starting in September.In another sign of rate-cut optimism, risk appetite among investors jumped markedly this month. An <a href="https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/investors-risk-appetite-jumps-to-highest-since-2021-as-outlook-improves-81687731" target="_blank" rel="noopener">S&amp;P Global survey</a> indicated it rose to 28% in May — its highest reading since late 2021 — from 5% in April.There are other geopolitical reasons to pile into gold, going beyond dovish expectations of rate decreases."The recent increases in the price of gold are largely driven by three factors: rising geopolitical tensions — including the unexpected <a href="https://www.businessinsider.com/iran-president-ebrahim-raisi-kobe-bryant-flying-helicopter-crashes-fog-2024-5">death of Iran's president</a> — the weakening of the dollar, and purchases by central banks," said Grzegorz Dróżdż, a market analyst at Conotoxia. If negative surprises are avoided this year, he expects gold to possibly rally beyond $2,500 in 2024.Given that gold is a safe-haven asset, <a href="https://markets.businessinsider.com/news/commodities/gold-price-all-time-record-safe-haven-rate-hike-geopolitics-2024-3">international face-offs</a> have prompted more investors to buy the bullion. Meanwhile, US sanctions on Russian reserves sparked <a href="https://markets.businessinsider.com/news/commodities/de-dollarization-global-central-banks-are-hoarding-gold-like-never-before-2023-10">central banks to snap up the metal at a record pace</a>.The asset also benefits from a broader metals rally, with commodities <a href="https://markets.businessinsider.com/news/commodities/copper-price-best-investment-jeff-currie-commodity-metal-shortage-industry-2024-5?_gl=1*pqb1mv*_ga*MTMxNDIwNDI1Ni4xNjc1Njg3OTU4*_ga_E21CV80ZCZ*MTcxNjIxMzEwMi40MTEuMS4xNzE2MjE0MDAyLjYwLjAuMA..">such as copper</a> and silver also breaching their records. Spot silver climbed past an 11-year high on Monday."Silver has made incredible gains over the past fortnight, and it does look overbought at current levels. That would suggest that some profit taking could come in now," said David Morrison, a senior market analyst at Trade Nation. "But traders would have to be very brave or foolhardy to short a market moving this way."Correction: May 20, 2024 — An earlier version of this story misspelled the name of the Trade Nation analyst. He is David Morrison, not David Miarrions.

Gold prices are at yet another record high. That means rate cuts are coming soon.

<ul class="summary-list"><li>Gold prices surged Monday to a record high of $2,265.73 an ounce.</li><li>The Fed's preferred gauge of underlying inflation came in as expected Friday, affirming 2024 rate-cut hopes.</li></ul>The price of gold rallied to another record high on Monday, following fresh inflation data from Friday that <a href="https://www.businessinsider.com/fed-first-rate-cut-outlook-june-inflation-data-pce-index-2024-3" target="_blank" rel="noopener">boosted rate-cut hopes</a>. The yellow metal climbed as much as 1.6% to a new high of <a href="https://markets.businessinsider.com/commodities/gold-price">$2,265.73</a> an ounce.The year-over-year index of personal consumption expenditures rose 2.5% in February, in line with economist expectations. Core PCE, which excludes food and energy prices, rose 2.8% for the month, also in line with estimates. The results have fueled anticipation that the central bank's first rate cut will come in June.Typically, a lower-rate environment makes holding gold more alluring compared with other assets such as bonds, which yield lower returns when interest rates drop. Federal Reserve Chair Jerome Powell also applauded the latest US inflation data, saying it's "along the lines of what we would like to see" during his speech on Friday, which echoed his reiteration in last month's policy meeting of <a href="https://www.businessinsider.com/did-fed-cut-interest-rates-march-meeting-continues-pause-inflation-2024-3">a rate cut for this year</a>.The surging bullion price was also pushed up by its robust overseas demand, as global central banks are shifting away from dollar reserves because of geopolitical risks. On the other hand, China's struggling stock and real-estate markets have forced many investors to pivot to the "safe haven." In February, the People's Bank of China acquired about <a href="https://markets.businessinsider.com/news/commodities/gold-price-china-economy-dollar-yuan-central-bank-dedollarization-commodities-2024-3">390,000 troy ounces</a> of the precious metal. Overall, China's central bank now holds about 72.58 million troy ounces of gold, equivalent to about 2,257 tons.

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3 reasons why surging gold prices will climb another 8% by the end of 2025, Goldman says

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2 big reasons gold prices are set to surge 9% by early next year, according to Goldman Sachs

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Gold price hits an all-time high as bets on rate cuts and a Trump win fuel the precious metal

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Gold prices are at yet another record high. That means rate cuts are coming soon.

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