Goldman Sachs The Markets Why gold could rise even higher
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Feb 21, 2025 Lina Thomas, a commodities strategist with Goldman Sachs Research, dives into the recent surge in gold prices, driven by central bank buying and geopolitical tensions. She discusses the metal's role in investment portfolios and its value as a hedge during uncertain markets. The conversation highlights gold's intricate relationship with the U.S. dollar and how economic factors, including interest rates and trade tariffs, could influence future price movements. A positive outlook for gold suggests potential for further increases.
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Gold's Rise Despite Rising Rates
- Central banks, especially in emerging markets, significantly increased gold purchases after the 2022 freezing of Russian assets.
- This unprecedented surge in demand, driven by concerns about asset security, countered the typical negative impact of rising interest rates on gold prices.
2025 Gold Surge Drivers
- Two main factors drove gold's 10% surge in early 2025: increased central bank buying and safe-haven demand from speculators.
- Central banks bought more gold due to US policy uncertainty, while trade tensions and fears drove speculative demand.
Bullish Dollar and Gold
- Goldman Sachs maintains a bullish outlook on both the US dollar and gold, seemingly paradoxical but driven by different factors.
- Central banks buy gold with dollar reserves, unaffected by dollar strength, while investor demand hinges on interest rates.