Goldman Sachs predicts that by early 2025, the price of gold will reach $2,700 per ounce, an increase of approximately 8%. This year, the price of gold has risen by 21%, outperforming the S&P 500 index.
Goldman Sachs' latest recommendation is that investors should "choose gold" among all available commodities, as gold is expected to continue its record-breaking upward trend until 2025.
Goldman Sachs pointed out in its latest report that gold has the highest likelihood of rising among all commodities, and it continues to expect the price of gold to reach its target of $2,700 per ounce in early 2025. This means that based on the current spot gold price, the price of gold still has more than 8% upside potential by the beginning of next year.
Since the beginning of this year, the price of gold has risen by about 21%, surpassing the 17% increase seen so far. $S&P 500 Index (.SPX.US)$ Since the beginning of this year, it has increased by about 17%.
Goldman Sachs analyst team led by Samantha Dart stated, 'In this weak cyclical environment, gold stands out as the most confident commodity for us in the recent rise.'
Dart emphasizes that, based on the current situation, other commodities such as oil, natural gas, and copper are far less attractive than gold.
Three reasons to continue buying gold:
US debt crisis: 'We believe that since mid-2022, central banks around the world have doubled their gold purchases out of concerns over US financial sanctions and US sovereign debt. Whether these concerns will actually materialize or not, this situation will continue.'
The Fed's interest rate cut: "The upcoming Fed interest rate cut will attract Western capital back to the gold market, which is largely what the significant rise in gold prices over the past two years has not seen."
Hedging effect: "Gold provides important hedging value for investment portfolios against geopolitical shocks."
Dart estimates that in the case of increasing concerns about the US debt crisis, a 1-standard deviation (13 basis points) widening of the US credit default swap (CDS) spread, would even allow for a 15% increase in gold prices.
China's physical gold demand
On the other hand, Goldman Sachs also mentioned the significant demand for physical gold in the Chinese market, despite the recent weakening in gold prices. However, given Chinese consumers' sensitivity to price, Goldman Sachs expects that if gold prices decline slightly, demand will rebound again.
Goldman Sachs expects that for every 10% decrease in the Shanghai Gold Exchange (SGE) gold price, the demand for physical gold in China will increase by 16%. Furthermore, if gold prices decline slightly, the People's Bank of China may return to the market with a large number of purchase orders to prevent a sharp decline in commodity prices.
Editor/Rocky