Goldman: "Gold Price to Hit Record High Next Year... Trump Will Drive the Rise"

Gold Prices Fall Amid "Trump Trade"
Trade Tensions from Tariff Hikes → Upward Pressure

Gold prices, which have been on the rise throughout this year, fell due to the 'Trump trade,' but Goldman Sachs has drawn attention by forecasting that gold prices will reach $3,000 per ounce by the end of next year.

An employee is organizing gold bars at the Korea Gold Exchange Jongno Main Branch in Jongno-gu, Seoul.

According to Bloomberg on the 17th (local time), Goldman Sachs analyst Daan Struyven recently presented a gold price target of $3,000 per ounce by the end of next year in an investor memo.

Analyst Struyven predicted that "gold prices will periodically rise thanks to gold purchases by central banks worldwide and interest rate cuts by the U.S. Federal Reserve (Fed)," and that gold prices will continue an upward trend during President-elect Donald Trump's administration.

Gold, which hit an all-time high earlier this year, peaked at around $2,800 per ounce on the 30th of last month. This represents a 35% surge compared to the beginning of the year, significantly outperforming the S&P 500 index during the same period.

However, gold prices plunged more than 8% from their peak by the 15th due to Trump's re-election. This was driven by expectations that U.S.-first policies would be implemented, causing the dollar to surge and concerns that tariffs and tariff policies would reignite inflation, thereby slowing the Fed's pace of interest rate cuts.

Amid this, Goldman Sachs analyzes that if the Trump administration's second term actually begins, it will rather fuel gold price increases. This is because speculative demand for gold is expected to surge if trade tensions escalate unprecedentedly due to Trump's tariff hikes.

They also noted that concerns over a sharp increase in the U.S. fiscal deficit could put upward pressure on gold prices. It is expected that central banks worldwide, which are stockpiling more gold instead of dollars, will accelerate such moves due to Trump. According to the World Gold Council, central banks' gold purchases have already reached 694 tons this year.

However, there are also many experts who predict a bearish outlook on gold prices. This is due to various factors such as the possibility of ending the Middle East and Ukraine wars under Trump's administration, and the launch of the government efficiency department (DOGE).

Meanwhile, Goldman Sachs expects that the global benchmark Brent crude oil price, which is predominantly forecasted to decline next year, will be maintained between $70 and $80. Considering the current Brent crude price is around $71, this implies a potential upside of up to 12%.

Oil price information service providers like OPIS and energy logistics company Kaypler have suggested that next year's oil price could plunge to as low as $40 due to the voluntary production cut removal by OPEC+ (the Organization of the Petroleum Exporting Countries (OPEC) members and non-OPEC allies) and a forecasted decrease in Chinese consumption.

On the other hand, Goldman Sachs analyzed that the Trump administration's second term, which is expected to take a tougher stance on oil-producing Iran than the Biden administration, could strengthen sanctions on Iran's oil exports and push oil prices higher.