Gold (GC=F) is poised to reach $5,000 next year if Federal Reserve independence comes under threat, Goldman Sachs analysts said.
The precious metal is up more than 5% over the past five sessions amid investor expectations of an interest rate cut from the Fed at its meeting later this month. The price action follows President Trump’s move to oust Fed governor Lisa Cook and replace her with a rate cut supporter.
Goldman Sachs analysts argued in a note on Wednesday that investors should diversify into commodities, “especially gold,” warning that damage to Fed independence could drive higher inflation, weaker prices on stocks and long-dated bonds, and an erosion of the US dollar’s reserve currency status.
“Should private investors diversify more heavily into gold, we see potential upside to gold prices to well above our $4,000 mid-2026 baseline,” analyst Samantha Dart said in the note. “As a result, gold remains our highest-conviction long recommendation.”
Even a modest shift in flows could spark explosive gains.
“For example, we estimate that if 1% of the privately owned US treasury market were to flow into gold, the gold price would rise to nearly $5,000/toz, assuming everything else constant,” Dart wrote.
Read more: How to invest in gold in 4 steps
The forecast mirrors JPMorgan’s outlook, which sees gold reaching $4,250 by the end of 2026, noting that any weakening of Fed independence could have significant implications for long-term prices.
Goldman Sachs analysts, who are also bullish on copper (HG=F) and US natural gas (NG=F), flagged risks from supply concentration driving prices higher, with key commodities increasingly sourced from geopolitical hot spots, such as energy products from the Middle East and Russia and rare earth minerals from China.
“With commodities increasingly used as leverage, the risk of supply disruptions – and potential price spikes – has grown,” the analysts said.
Gold futures are up 38% this year, driven by central bank buying, expectations of Federal Reserve rate cuts, and increased inflows into physically backed exchange-traded funds.
The precious metal has far outperformed the S&P 500 (^GSPC) and even bitcoin (BTC-USD), which are up 10% and 17%, respectively, during the same period.
On Thursday, gold futures pulled back from record highs to hover near $3,600 an ounce while spot prices eased to about $3,530 as the recent rally in precious metals took a breather.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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