Goldman Sachs The Markets
Why gold could rise even higher
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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Quick takeaways
- The surge in central bank gold purchases, particularly from emerging markets, has been a crucial factor driving gold prices to all-time highs.
- Gold is viewed as an essential hedge in investment portfolios amid economic uncertainty, with potential for further appreciation given inflation and debt concerns.
Deep dives
Central Bank Demand and Its Impact on Gold Prices
The significant increase in central bank gold demand since 2022 has been a major driver of gold prices reaching all-time highs. Following the freezing of Russia's Central Bank assets, many central banks, especially in emerging markets, began purchasing gold as a hedge against potential risks associated with holding reserves in US dollars or Euros. This surge in demand has continued unabated, pushing gold prices higher despite rising interest rates, which typically exert downward pressure on gold. The continued buying from central banks is expected to maintain upward momentum for gold as uncertainties in the global economy persist.
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