Gold Prices Soaring... Heading to $3100 by Year-End

Goldman Sachs Raises Gold Price Forecast to $3,100 per Ounce
Trump's Tariff Policies Likely to Drive Gold Prices Higher
Gold Could Reach as High as $3,300

Goldman Sachs, a major U.S. investment bank, has raised its year-end gold price forecast to $3,100 per ounce. This is another upward revision from last month's forecast of $3,000 per ounce. Due to increased economic uncertainty caused by President Donald Trump's tariff policies and other factors, gold prices are expected to remain strong for the time being.

On the 18th, as gold prices soar and a gold bar shortage occurs, customers inquiring about purchasing gold bars at the Korea Gold Exchange Jongno Main Branch in Jongno-gu, Seoul, turn away upon hearing the sold-out news. 2025.2.18. Photo by Kang Jin-hyeong

According to Bloomberg on the 18th, Goldman Sachs analysts Lina Thomas and Dan Struiven stated in a recent report that the year-end gold price target could reach $3,100 per ounce, with central banks' gold purchasing demand potentially reaching an average of 50 tons per month, exceeding previous estimates.

According to the New York Mercantile Exchange, the international spot gold price rose to $2,914.73 per troy ounce (31.1034768g) as of February 18, approximately 4,263,000 KRW. Domestic gold prices are also soaring. As of February 11, the cost to purchase 1 don (3.75g) of gold on the Korea Gold Exchange website reached 597,000 KRW, marking an all-time high.

One of the main factors driving the rise in gold prices is the U.S. Federal Reserve's interest rate cut policy. Generally, when interest rates fall, the yields on interest rate-linked assets such as bonds decrease, while the value of alternative assets like gold tends to increase.

Geopolitical risks in the Middle East have also pushed gold prices higher. Gold prices typically fall when the dollar is strong and rise when the dollar is weak; however, this pattern has been disrupted since last year. Due to escalating geopolitical tensions such as the Russia-Ukraine war and the prolonged Israel-Hamas conflict, gold prices have surged. This year, President Trump's tariff war declaration has further strengthened gold prices. Additionally, central banks around the world have continued purchasing gold to diversify their foreign exchange reserves, contributing to the sharp rise in gold prices.

The report stated, "If concerns about inflation and the U.S. fiscal crisis increase, central banks worldwide, especially those holding large amounts of U.S. Treasury bonds, may purchase more gold to diversify risk."

The upward trend in gold prices is expected to continue this year. The market anticipates that as economic uncertainty grows due to tariff impositions, investors will prefer safe-haven assets, leading to increased inflows into gold. This increased demand is a cause of rising gold prices. According to The Wall Street Journal (WSJ), major investment banks JP Morgan and Citigroup also forecasted a peak gold price of $3,000 per ounce in their 2025 gold market outlook earlier this year.

The report projected, "If economic policy uncertainties, including U.S. tariff impositions, persist, speculative demand may increase, potentially driving gold prices up to $3,300 per ounce."