Gold Hits Their ATH Again and Next Year Goldman Sachs Predicts $4,900 Gold
- With Fed rate cuts expected next year, Goldman Sachs predicts gold prices could climb even higher to $4,900.
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| Photo by Zlaťáky.cz on Unsplash |
Precious metals have entered uncharted territory, with gold and silver surging to fresh all time highs in a rally that marks their strongest annual performance since 1979. Spot gold climbed more than 1.5% to break the $4,400 barrier, obliterating the previous record set in October, while silver rallied nearly 3.4%, closing in on the psychological $70 an ounce threshold. This explosive growth with gold up nearly 70% year to date is not merely a speculative bubble but the result of a "perfect storm" of monetary loosening and escalating global conflict.
The geopolitical landscape has become the primary engine for this flight to safety. Traders are reacting to distinct flashpoints: the United States has intensified an oil blockade against Venezuela to pressure the Maduro regime, while in the Mediterranean, Ukraine executed a first of its kind attack on a Russian shadow fleet oil tanker. These incidents, alongside simmering Japan China tensions, have reinforced the "haven appeal" of bullion. When the geopolitical temperature rises, investors historically dump riskier assets in favor of physical metals that carry no counterparty risk.
Simultaneously, the financial backdrop is shifting in favor of non yielding assets. Markets are pricing in two Federal Reserve rate cuts in 2026, a sentiment bolstered by President Donald Trump’s advocacy for looser monetary policy. Lower interest rates typically weaken the dollar which fell 0.2% on the news making gold cheaper for foreign buyers and more attractive than bonds. This has triggered what analysts call a "debasement trade," where investors flee sovereign bonds due to fears that ballooning US debt will erode the value of fiat currency over time.
The demand profile for gold is also structurally changing. While central banks continue their buying spree, a "broader capital base" is emerging. New entrants, including corporate treasury departments and stablecoin issuers like Tether Holdings, are hoarding metal to back their digital assets, adding resilience to demand that didn't exist in previous cycles. This institutional floor is competing with ETF investors, who have poured money into gold backed funds for four consecutive weeks, reversing earlier outflows.
Looking ahead, major financial institutions see further upside despite the risk of short term volatility due to thin holiday liquidity. Goldman Sachs has issued a base case prediction of $4,900 an ounce by 2026, citing the tightening physical supply. While platinum and palladium are also drafting off this momentum with platinum crossing $2,000 for the first time since 2008 gold remains the undeniable leader of this commodities super cycle.