Gold could hit $5,000 if Fed independence damaged (by Trump), says Goldman Sachs
Published: 03:26 04 Sep 2025 EDT
Gold is Goldman Sachs's "highest conviction" commodity, with analysts forecasting it could soar to $5,000 an ounce if the Federal Reserve’s independence is damaged, with moves by Donald Trump this year having regularly spooked markets.
It would only take private investors shifting 1% portion of US government bond holdings into gold, the investment bank said.
"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,” Goldman said.
"In contrast, gold is a store of value that doesn’t rely on institutional trust."
Spot gold prices were down 0.5% at around $3,538 on Thursday after surging to new record highs around $3,580 late on Wednesday.
By the middle of next year, Goldman analysts said its base case was for the yellow metal to rise around 13% to $4k.
Under a 'tail-risk' scenario, the price of bullion could hit $4.5k, with the $5k an estimate based on 1% of private investors' holdings of US Treasuries being switched to gold.
"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 an ounce, assuming everything else constant,” the analysts said.
"As a result, gold remains our highest-conviction long recommendation in the commodities space."
Goldman's note did not touch on what exact damage to the Fed independence it envisaged.
News around the central bank this year has included Donald Trump threatening to remove Fed chair Jerome Powell and moving to dismiss Fed governor Lisa Cook.
European Central Bank President Christine Lagarde Trump further undermining the independence of the Fed would represent a "very serious danger" to the global economy.
