Gold price could see $5,000 if Trump keeps attacking Fed: Goldman Sachs

U.S. President Donald Trump’s war against the Federal Reserve may send gold prices to as high as $5,000 an oz. by driving down investor confidence in the dollar, Goldman Sachs says.

In a note published Thursday, the bank’s analysts warned that Trump’s attempt to interfere with the U.S. central bank could further erode trust in dollar-denominated assets, thereby adding to gold’s safe-haven appeal.

The note, first seen by Financial Times, comes just a day after gold rallied to a new all-time high above $3,560 an ounce. Bullion has now risen by 35% so far this year, as investors and central banks piled into the metal as a hedge against political uncertainty and U.S. debt worries.

The latest rise was fueled by widening expectations that the U.S. will begin to cut interest rates, a scenario that benefits non-yielding assets such as gold. The monetary easing could become even more aggressive should the Trump administration succeed in politicizing the Fed, which sparked concerns amongst some investors.

“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,” wrote Daan Struyven, co-head of global commodities research at Goldman Sachs.

On the other hand, “gold is a store of value that doesn’t rely on institutional trust”, Struyven added.

Bullish forecasts

The bank’s base case is that gold could continue its recent rise and achieve an average price of $3,700 an oz. by year-end, then $4,000 by mid-2026, assuming that central bank buying remains robust. However, this scenario does not factor in the potential “big move” out of dollar assets, such as bonds, by private investors, which Goldman says could push gold even higher.

“If 1% of the privately-owned U.S. Treasury market were to flow to gold, the gold price would rise to nearly $5,000 per troy ounce,” Goldman’s Struyven wrote.

The recent Fed drama of Trump’s unprecedented move to fire Governor Lisa Cook, now challenged in court, could help gold as it undermines the Federal Reserve, Arun Sai, multi-asset portfolio manager at Pictet Asset Management, told the Financial Times. 

Goldman’s call on gold echoes the thesis built by JPMorgan, which said earlier this year that under the current macroeconomic climate, the yellow metal could realistically reach $6,000 an oz. even with a small allocation away from U.S. assetss