Gold prices could surge toward $5,000 an ounce if investor confidence in U.S. institutions falters and undermines the Federal Reserve’s credibility, Goldman Sachs warned, reinforcing its stance that the metal remains the firm’s “highest-conviction long recommendation.”
The bank’s baseline forecast anticipates gold reaching $3,700 by the end of 2025 and $4,000 by mid-2026, supported by ongoing central bank purchases. Goldman noted that its base case implies only “modest positive returns” for broad commodity indices over the next year, positioning gold as a notable outlier.
However, analyst Samantha Dart cautioned that tail risks are increasing.
“A scenario where Fed independence is damaged would likely lead to higher inflation, higher long-end rates, lower stock prices and an erosion of the Dollar’s reserve currency status,” Dart wrote in a note.
In such circumstances, private investors might follow central banks in diversifying into gold, potentially sending prices well above the $4,000 mid-2026 baseline. Dart estimates that if just 1% of the privately held U.S. Treasury market shifted into gold, the metal could reach nearly $5,000 an ounce.
This compares with Goldman’s current tail-risk scenario of $4,500, which already assumes central bank demand rising to 110 tonnes per month, ETF holdings recovering to pandemic-era levels, and positioning near historical highs.
Beyond Fed credibility, Goldman highlighted mounting risks from commodity supply concentration in geopolitical hotspots such as the Middle East, Russia, the U.S., and China. Export restrictions and disruptions along key trade routes, combined with moderating OPEC+ spare capacity, raise the potential for sharp price spikes in raw materials.
The analyst pointed to examples like Russia’s 2021 cut to gas exports to Europe and China’s recent restrictions on rare earths, illustrating how commodities can be used as leverage.
“While high OPEC+ oil supply spare capacity through early 2025 would have likely capped oil price upside in a more significant disruption scenario, OPEC+ spare capacity is now moderating, leaving oil markets more vulnerable to upward price spikes under a supply disruption shock,” the note stated.
Structural trends are also tightening commodity markets, particularly in gold and copper, where supply is slow to adjust. Goldman identified three long-term drivers: de-risking energy through power grid investment, rising defense spending, and dollar diversification.
Central banks, particularly in Asia, have been major gold buyers since 2022, following the freezing of Russian dollar assets. This surge in demand has been the primary factor behind a 94% rally in gold prices since 2022.
While the base case predicts only modest gains across broad commodity indices over the next year, Goldman stressed that “commodities as a hedge against inflation (and other tail) risks is increasingly relevant in the current environment.”
Given this context, the bank views gold not only as a defensive asset but also as the clearest beneficiary of any erosion in U.S. institutional credibility.
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