Gold prices could hit $5K if Trump undermines Fed, Res.: Goldman Sachs

By Al Mayadeen English
Source: Agencies
4 Sep 2025 19:05
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Goldman Sachs warns that gold prices could approach $5,000 an ounce if Donald Trump’s challenge to the US Central Bank undermines investor confidence.

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Sam Nguyen shows a gold bar at her shop in the St. Vincent Jewelry Center in the Jewelry District of Los Angeles, Wednesday, April 30, 2025 (AP)

Gold prices could soar to nearly $5,000 per troy ounce if US President Donald Trump’s efforts to challenge the independence of the US Central Bank succeed, the Financial Times reported, citing Goldman Sachs.

The precious metal has already surged 35% this year, surpassing $3,500, making it one of the world’s top-performing assets. Demand from both investors and central banks has increased as markets seek safe havens amid political turmoil and rising debt.

Concerns deepened after Trump attempted to remove Federal Reserve governor Lisa Cook, a move now being challenged in court. Analysts warn that if the Fed’s independence is weakened, it could lead to higher inflation, a weaker dollar, and further pressure on US Treasury markets.

“A scenario where Fed independence is damaged would likely lead to higher inflation, lower stock and long-dated bond prices and an erosion of the dollar’s reserve currency status,” Daan Struyven, co-head of global commodities research at Goldman Sachs, told the Financial Times.

Gold as safe haven, inflation hedge

Historically, gold has been seen as an inflation hedge and a store of value during times of instability. “Gold is a store of value that doesn’t rely on institutional trust,” Struyven explained.

Goldman Sachs' base case projects prices reaching $4,000 by mid-2026. However, Struyven noted that if even 1% of privately held US Treasury assets shift into gold, the price could approach $5,000.

Investor behavior, Central Bank demand

Investment firms are also holding firm on gold. “We are double overweight gold,” Arun Sai, of Pictet Asset Management, told the Financial Times. He added that Trump’s latest confrontation with the Fed has reinforced confidence in keeping gold positions strong.

Central banks have sharply boosted gold reserves since the start of the Ukraine war, while private investors continue to shift portfolios away from traditional havens such as the dollar and government bonds.

Analysts warn that if global investors abandon US Treasury assets in favor of gold, the market could see long-term consequences. BlackRock recently argued that gold has become a more reliable portfolio diversifier than Treasuries, as investors seek protection from equity sell-offs.