Since Donald Trump won the U.S. presidential election, gold prices have been under pressure, with the largest weekly drop in over three years occurring last week. Nevertheless, on Monday, Goldman Sachs reiterated its forecast that gold prices would rise to $3,000 per ounce by the end of next year, advising investors to “buy gold.” The bullish stance from Wall Street’s major bank, combined with the outlook for Federal Reserve rate cuts, contributed to a significant rebound in gold prices on Monday.
Spot gold surged over 2% to $2,612.83 per ounce, climbing back above $2,600 and poised for the largest one-day gain since August. U.S. gold futures also rose 1.8% to $2,615.70 per ounce.
Analysts noted that the recent rapid decline in gold prices was primarily driven by the resolution of the U.S. presidential election, with Trump returning to the White House. Following Trump’s victory, the dollar strengthened, Treasury yields rose, and other “Trump trades” remained hot, leading to six consecutive days of gold price decline. If Trump’s policies are enacted, the dollar index could have further short-term upside.
However, Trump’s policy proposals are also seen as a reason to be bullish on gold. The market widely expects that if Trump returns to power, his proposed tariffs and other economic policies could exacerbate inflation, prompting the Federal Reserve to slow its rate-cutting pace. Given the inflationary potential of Trump’s policies, about half of swaps traders anticipate a Fed rate cut next month, before Trump’s inauguration.
Daniel Pavilonis, Senior Market Strategist at RJO Futures, stated that regardless of whether the Fed cuts rates, gold prices technically have a demand to return to near the $2,700 level.
Goldman Sachs ranks gold among its top commodity picks for 2025, maintaining a year-end target of $3,000 per ounce due to expectations of Fed rate cuts, strong central bank demand for gold, and Trump assuming the presidency. Regarding the recent decline in gold prices, the bank’s analysts commented that the post-election pullback, with speculative buying retreating from historic highs, actually presents a buying opportunity for investors.
It’s not just Goldman; other institutions are also bullish on gold in the long term.
George Milling-Stanley, Chief Gold Strategist at StateStreet Global Advisors, stated that despite recent sell-offs, the gold market maintains a solid upward trend, with potential to reach previous bullish targets by year’s end. Charu Chanana, a strategist at Saxo Capital Markets, noted that gold’s fundamental support factors remain intact, and geopolitical developments could further drive safe-haven demand for the metal.
