Driven by geopolitical risks and expectations of Federal Reserve rate cuts, the international gold market has reached a historic moment. Not only did gold prices hit another record high on Thursday, but Goldman Sachs also raised its year-end gold price target for the second time in just over a month. The latest forecast increases the target price from $3,100 to $3,300 per ounce, with indications that prices could climb even higher.
On Thursday morning (Eastern Time), spot gold prices broke through $3,059.48 per ounce, setting a new all-time high. Similarly, gold futures on the New York Mercantile Exchange (COMEX) rose 1.5% to $3,068.80 per ounce, also reaching a record high.
Notably, this marks the second time this year that Goldman Sachs has raised its gold price target. In late February, the firm increased its forecast from $2,890 to $3,100 per ounce. Now, it has added another $200 to its projection. The report also emphasized that inflows into gold-backed ETFs have exceeded expectations, reflecting strong demand from investors for risk-hedging assets. If ETF holdings return to the highs seen during the 2020 pandemic, gold prices could potentially surge to $3,680 per ounce.
The current gold market is being driven by a “triple engine” dynamic: geopolitical risk premiums are raising short-term price thresholds, expectations of monetary easing are reducing holding costs, and central bank gold purchases are establishing a foundation for long-term value.
Market analysts generally agree that the immediate trigger for this gold price rally is U.S. President Donald Trump’s announcement of a 25% tariff on imported automobiles. This policy has heightened global trade tensions, eliciting strong pushback from the EU, Canada, and other countries, which has put pressure on global stock markets. Automotive stocks around the world have also dropped significantly. Bob Haberkorn, senior market strategist at RJO Futures, pointed out the widespread concern over the ripple effects of this tariff policy, predicting that the $3,100 price level could be breached swiftly.
At the same time, expectations of a shift in Federal Reserve monetary policy continue to intensify. Although the Federal Reserve kept its benchmark interest rate unchanged last week, policymakers hinted at the possibility of rate cuts later this year. Market participants are now closely watching the U.S. Personal Consumption Expenditures (PCE) data to be released on Friday. Softer inflation data could pave the way for Fed rate cuts, further supporting gold prices.
Finally, a key structural shift identified in Goldman Sachs’ latest report is the dramatic increase in gold purchases by central banks since 2022 — particularly those in emerging markets. Gold reserves purchased by central banks have surged fivefold and exceeded 1,000 tonnes annually for three consecutive years. This trend, viewed as a strategic response to the freezing of Russian foreign exchange reserves, is expected to persist at least through 2025. The analysts highlighted that this behavior signals not just cyclical adjustments but marks the beginning of a broader restructuring of the global reserve system.
As global trade patterns and monetary systems evolve, gold is transforming from a traditional safe-haven asset to an important strategic asset in the new economic order. This “golden wave,” driven by policymakers and institutional investors alike, has the potential to reshape the flow of global capital in the 21st century.
