“Go for Gold” as Metal Consolidates, Says Goldman Sachs

Are reports of gold’s death greatly exaggerated? Analysts at Goldman Sachs clearly think so; why else would they declare that it’s time to “go for gold”?[1] And that is a welcome confirmation for Americans who hold gold IRAs and other gold investments.

First, a little review of what’s been happening with gold.

The last two weeks, I addressed the weakness that appears to have overcome gold following the victory by Donald Trump over Kamala Harris in the presidential election.

That weakness was a departure from the impressive resilience demonstrated by gold for some time before the election. Since the beginning of the year through the end of October, gold appreciated roughly 35% to around $2,800 per ounce. [2] But the relatively sustained momentum supporting gold has been in play for much longer, pushing rate-sensitive gold higher by roughly 53% over the last nearly three years in spite of the Federal Reserve’s 11 separate interest rate increases throughout 2022 and 2023. [3] The fact that some suggest gold has been one of the best performing assets during this period speaks to its particularly impressive durability. [4]

As of election eve, however, gold seems to have run into a bit of a wall. Reflecting a clear aversion to the results of November 5th, gold retreated roughly 6% in just the period spanning that day through the end of last week.[5]

Analysts quickly concluded there were three fundamental reasons for gold’s election-triggered struggles.

Perhaps the most immediate reason is that the uncertainty many investors felt might characterize the contest’s outcome — including the possibility that it might take days or even weeks to determine a victor — was quickly resolved by what turned out to be a fast and relatively uncontroversial resolution.

“Unwinding the political uncertainty trade,” is how Peter Grant of Zaner Metals referred to it.[6]

Another reason for gold’s distress, some analysts theorized, was initial-reaction concern about the way Trump’s ambitious tax-cut and spending plans could add to the nation’s debt burden, send bond yields higher, and strengthen the dollar (a gold-contrary condition).[7]

And then there’s the matter of how those same prospective tax cuts, along with the more relaxed regulatory environment the president says he’s committed to, may stoke the stock market from here. Strategists have suggested investors could grow averse to safe-haven assets such as gold if they feel more confident about the future stability of risk-on assets such as stocks.[8]

But even as signs persist of gold’s fragility against the backdrop of these factors, numerous analysts say gold’s current troubles are a temporary reaction to the election results. The simple centerpiece of their reasoning is that the same drivers they say have supported the metal since the beginning of its bull run remain every bit as relevant today.

“Once the post-election dust settles,” Zaner’s Peter Grant said, look for gold to “once again focus on geopolitical tensions, concerns about the Chinese and European economies, soaring global debt levels, ongoing central bank gold buying, and the political uncertainty in Germany and Japan.”[9]

And while that undoubtedly is reassuring for many gold investors to hear, it is just a little shy of a full-throated endorsement of gold’s future prospects that would prompt many investors to go for gold.

Which is why, after a couple of weeks of watching gold appear to twist in the post-election wind, a number of those investors may be excited to read what analysts at Goldman Sachs, one of the world’s largest and most prominent investment banks, had to say about gold just a handful of days ago.

Goldman analysts concluded that gold may thrive over at least the next 13 months on the strength of specific key drivers, both structural and cyclical in nature. The respected financial house also concluded that, because of the extent of the support they project gold could receive from these energy sources, they forecast the metal’s price to surpass $3,000 per month by the end of next year.

Is it too soon to start drafting the epitaph of the gold bull? Strategists at Goldman Sachs certainly seem to think so. And retail investors who either own gold already or who’ve been considering going for gold might find it helpful to know more about why that is.

Let’s see if we can help them by providing a little more context.

Goldman Sachs Analysts Say Gold’s Price Decline Has Produced “Attractive Entry Point to Buy”

“Go for gold.”[10]

That phrase sounds like the desperate suggestion of a hopeful investor who wants to see gold get back to its bullish ways and is willing to say anything to help make it happen. But it so happens that at this time in history there’s much more to it than hope.

“Go for gold” is the stated opinion of an analyst team at Goldman Sachs (the second largest investment bank in the world) that remains highly optimistic about gold’s prospects in spite of the metal’s post-election struggles.[11]

So, why are Goldman analysts so pleased for gold’s future at this time?

At the most fundamental level, it’s because they see gold in the same way as Peter Grant and others: as a safe-haven asset that will have no shortage of opportunities for its safe-haven properties to activate in the years to come in a world that likely will continue to be characterized by general uncertainty.

Which means those analysts see gold’s current price levels of around $2,650 – a $150 or so decline from pre-election highs — as a case of the metal going on sale for what should be (in their view) a relatively brief period.[12]

“The gold price consolidation following the orderly U.S. election—flushing speculative positioning from near all-time highs—provides an attractive entry point to buy gold,” the analyst team said in a research note published last Sunday.[13]

But why, exactly? What are the specific reasons for the optimism?

There are a couple; one represents structural demand for the metal, while the other represents cyclical demand.

The structural catalyst, says Goldman, is — surprise! — central bank demand. The world’s central banks have been buying gold at record levels for the last nearly three years…a wave of demand that they say is attributable to a wide variety of reasons, including a desire to hedge against inflation and geopolitical risk.[14]

But Goldman analysts suggest the real reason is the desire among many of these banks to stay clear of U.S. sanctions such as those imposed on Russia in the wake of its February 2022 invasion of Ukraine.[15] And that the surest way to do that is to stock up on gold…a politically neutral asset that has very limited counterparty risk.[16]

As for the cyclical driver, Goldman lead analyst Daan Struyven and his team say they expect that driver will be flows into gold exchange-traded funds from investors who are looking to hedge against impacts of Federal Reserve interest rate cuts through at least the end of next year.[17]

Questions about whether the Federal Reserve can stick to the rate cut path have emerged as recent inflation numbers show a concerning revival of price pressures. In October, the annual core consumer and producer price indexes landed above 3% together for the first time since April 2023.[18]

But Goldman analysts see rate cuts continuing, in no small way because of a reality that is competing with inflation for oversight by Fed policymakers: growing fragility in the labor market.

“The data probably don’t justify another rate cut next month,” Bloomberg columnist John Authers recently said. “However, the Fed has a dual mandate. The latest employment figures showed weakness, and so on balance the path of least resistance is to cut again.”[19]

So, Goldman analysts see continued central bank gold-buying in our future at high levels, as well as ongoing rate cuts — high-octane fuel for gold, potentially. All are reasons that companies, nations and individuals investors may viably decide to “go for gold.”

Goldman Sachs Projects Gold Reaching as High as $3,150 by Next Year

In the opinion of Goldman Sachs’ analysts, the “high-octane fuel” of continued central bank buying and ongoing rate cuts could push the price of gold to $3,000 per ounce by the end of next year.[20]

But they go one step further, saying gold potentially could rise even higher by the end of 2025, to around $3,150 per ounce, if the Fed sticks to its rate cut plans in the face of soaring indebtedness and makes good on its threat to liberally use tariffs against trading partners.[21]

Fiscal year 2024 saw the annual budget deficit reach its third-highest total in history and the gross national debt currently sits on the doorstep of $36 trillion.[22] These dubious distinctions suggest to Goldman analysts that fiscal instability could prove to be a prominent gold driver, going forward.

“Rising fears of inflation and fiscal risks could drive speculative positioning and ETF flows higher,” the analysts said, “while U.S. debt sustainability concerns may push central banks, especially those holding large U.S. Treasury reserves, to buy more gold.”[23]

As for tariffs and their impacts, there are a few prominent potential implications, each of which could bode well for gold.

For one thing, notes Solomon Global analyst Matthew Jones, tariffs can generate greater economic uncertainty, which in and of itself may serve as a catalyst of higher gold prices.[24]

Additionally, as Jones points out, there’s the possibility that tariffs can trigger upward price pressures — inflation, in other words…something that can prompt investors to flock to gold, particularly during periods when central banks are easing rates.[25]

There’s also the potential for tariffs to compromise dollar strength, a condition that gold typically finds favorable.

“During Trump’s first term in office,” Jones explains, “trade restrictions coupled with uncertainty in global supply chains weakened the value of the dollar relative to other currencies. A weaker dollar makes gold cheaper for international buyers, which increases demand and pushes up the price of the precious metal.”[26]

Taken together, notes Struyven and team, these factors could lead to an air of “policy uncertainty” permeating about the second Trump era, a condition with which safe haven assets such as gold frequently find favor.[27]

And in the case of gold, say the Goldman strategists, that could push gold higher by another 20% above present levels.

Is It Really Time for Individual Investors to “Go for Gold”?

Admittedly, the case made by Goldman analysts for buying – or buying more – gold in the face of its recent backslide may seem compelling to many observers. But does it mean that retail investors, including garden variety retirement savers, should, in fact, “go for gold”?

Ultimately, each person will have to decide for themselves just how resonant the Goldman Sachs case for gold really is. Some will decide they will in fact look past the metal’s recent sideways movement to take advantage of the buying opportunity Goldman analysts now say exists. For those investors, accessing high-quality gold — and silver, for that matter — can be a simple, straightforward and transparent process. This is the case even when investors choose to purchase their physical metals through a tax-advantaged gold IRA, which is now possible thanks to a change in the tax code some years back (please consult with a qualified advisor to learn more about the tax implications of IRAs).[28]

One thing investors should be especially mindful of — even when weighing the analysis of credible analysts such as those at Goldman Sachs — is that the price-target part of their research should probably be taken with a grain of salt. In my view, price targets should be seen as no more than one small part of the overall analyst assessment…and should never be regarded as an assurance or guarantee of a number that actually will be reached.

But price targets can be considered a representation of just how much confidence analysts have in their research. Based on Goldman Sachs’ reasoning for their gold price projections, it’s easy to understand why their strategists believe it’s time to “go for gold” — for retirement savers, perhaps in the form of a gold IRA.

[1] Jake Lloyd-Smith, Yahoo Finance, “Goldman Says ‘Go for Gold’ as Central Banks Buy, Fed Cuts in ‘25” (November 18, 2024, accessed 11/21/24).

[2] CNBC.com, “Gold COMEX (Dec′24)” (accessed 11/21/24).

[3] CNBC.com, “Gold COMEX (Dec′24)”; FederalReserve.gov, “Open Market Operations” (accessed 11/21/24).

[4] StockCharts.com (accessed 11/21/24).

[5] CNBC.com, “Gold COMEX (Dec′24).”

[6] Myra Saefong, MarketWatch, “Why gold prices are now dropping on the heels of Trump’s win” (November 11, 2024, accessed 11/21/24).

[7] Ernest Hoffman, Kitco, “Gold’s dramatic decline is not Trump-specific, silver demand from solar boosts long-term projections – Heraeus” (November 11, 2024, accessed 11/21/24).

[8] Saefong, “Why gold prices are now dropping.”

[9] Ibid.

[10] Lloyd-Smith, “Goldman Says ‘Go for Gold.’”

[11] Statista, “Leading banks worldwide as of September 2024, by revenue from investment banking” (accessed 11/21/24).

[12] CNBC.com, “Gold COMEX (Dec′24).”

[13] Christiaan Hetzner, Yahoo Finance, “Donald Trump’s presidency could light a speculative fire under gold, pushing the price to a fresh all-time high” (November 19, 2024, accessed 11/21/24).

[14] World Gold Council, “2024 Central Bank Gold Reserves Survey” (June 18, 2024, accessed 11/21/24).

[15] Hetzner, “Donald Trump’s presidency could light a speculative fire under gold.”

[16] World Gold Council, “2024 Central Bank Gold Reserves Survey.”

[17] Hetzner, “Donald Trump’s presidency could light a speculative fire under gold.”

[18] The Kobeissi Letter (@KobeissiLetter), “For the first time since April 2023, Core PPI and CPI inflation are back above 3.0%,” X (formerly known as Twitter) (November 14, 2024, 9:18 a.m., accessed 11/21/24).

[19] Cam Hui, MarketWatch, “Opinion: Why gold is a better bet than stocks for 2025” (November 19, 2024, accessed 11/21/24).

[20] Hetzner, “Donald Trump’s presidency could light a speculative fire under gold.”

[21] Ibid.

[22] Jeff Cox, CNBC.com, “U.S. deficit tops $1.8 trillion in 2024 as interest on debt surpasses trillion-dollar mark” (October 18, 2024, accessed 11/21/24); FiscalData.Treasury.gov, “Debt to the Penny” (11/21/24).

[23] Hetzner, “Donald Trump’s presidency could light a speculative fire under gold.”

[24] Matthew Jones, London Loves Business, “Golden tariffs: When Trump trade wars strike gold” (November 18, 2024, accessed 11/21/24).

[25] Ibid.

[26] Ibid.

[27] George Glover, Barron’s, “Gold Could Be the Next Trump Trade, Goldman Sachs Says. Forget DJT Stock.” (November 18, 2024, accessed 11/21/24).

[28] Congress.gov, “Taxpayer Relief Act of 1997” (August 5, 1997, accessed 11/21/24).