Gold to $5,000? How Central Bank Buying & Fed Turmoil Are Fueling the Gold Futures Rally

It’s the kind of bold forecast that grabs every trader’s attention: Goldman Sachs (GS) is predicting that gold (GCZ25) could surge to $5,000 by the end of next year.

During the Sept. 5 Market on Close livestream, John Rowland, CMT, joined to unpack the story after Twitter Tom asked whether this prediction is realistic — or just a throwaway number.

More News from Barchart

Dollar Slides and Gold Rallies to a Record on the Outlook for Fed Rate Cuts Dollar Weighed Down by the Prospects of Easier Fed Policy After Touching a 14-Year High, How Much Higher Can Silver Go From Here? Markets move fast. Keep up by reading our FREE midday Barchart Brief newsletter for exclusive charts, analysis, and headlines.www.barchart.com

The Fed Independence Question

At the core of Goldman’s call is the idea of Federal Reserve independence.

If the Fed becomes more politically pressured and more accommodating — especially if short-term rates are cut aggressively — that can fuel inflationary expectations. And inflation fears almost always drive flows into gold.

Why Central Banks Are Buying Gold

Normally, gold rallies are tied to U.S. dollar weakness. But John highlighted a different driver this time:

Petrodollars once recycled into Treasuries are now being diverted. Central banks are buying gold instead of Treasuries. Global central bank reserves of gold are now at 27%, which is the highest in 30 years. U.S. Treasury reserves, meanwhile, are at 23% — the lowest since the Global Financial Crisis.

This shift shows gold is increasingly being treated as the hard-asset alternative to U.S. debt.

Could $5,000 Gold Really Happen?

With demand from central banks, concerns over inflation, and questions around Fed independence, the stage is set for significant upward pressure.

Whether or not we reach $5,000 an ounce, the message is clear: gold is back in the spotlight as a hedge and as an active trade.

How to Stay Ahead with Barchart Tools

Track Gold Futures prices and other precious metals. Explore the ETF Finder for targeted exposure to commodities, metals, and miners. Use the Futures Heat Map to quickly gauge commodity trends. Stay on top of upcoming inflation data and Fed events with the Economic Calendar.

Bottom Line

Goldman Sachs’ $5,000 forecast may sound extreme — but with central banks shifting reserves and inflation risks lingering, it’s a scenario worth taking seriously.

Watch the quick clip here:

Stream the full Market on Close episode for more, and turn on email notifications so you never miss a live breakdown.

On the date of publication, Barchart Insights did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

View Comments