— Goldman Sachs analysts warned that gold prices could climb toward almost $5,000 an ounce if actions by President Donald Trump weaken the Federal Reserve’s independence, a development that would push investors away from dollars and long-term Treasuries and extend the metal’s 2025 rally.
Key Takeaways
- Gold has risen about 35% in 2025 to above $3,500 per troy ounce as investors seek safe havens.
- Goldman Sachs’ baseline forecast is $4,000 per ounce by mid-2026, with upside if dollar assets are sold off.
- If 1% of privately held US Treasuries shifted into gold, Goldman estimates the price could near $5,000 per ounce.
- Concerns about a politicised Fed — including Mr Trump’s move to remove Fed governor Lisa Cook — have increased demand for gold as an institutional hedge.
- Asset managers such as Pictet remain overweight gold after reassessing positions amid recent political risk.
- Central banks and private investors have both boosted gold holdings, while some traditional diversifiers like long-dated Treasuries are seen as less reliable.
Verified Facts
Gold has surged roughly 35% so far in 2025, trading above $3,500 per troy ounce at the time of this report. Goldman Sachs says its central scenario expects gold to reach $4,000 an ounce by mid-2026, reflecting continued demand as a hedge against political and inflation risks.
The bank’s analysts, led by Daan Struyven, model a shock scenario in which a significant reallocation out of US dollar assets — notably privately held US Treasuries — pushes the metal substantially higher. Goldman’s sensitivity analysis suggests that if 1% of the privately owned Treasury market moved to gold, the price could rise near $5,000 per ounce.
The immediate driver cited by market participants is concern that pressure from the White House on the Federal Reserve could reduce central-bank independence, increasing expectations for future rate cuts and higher long-term inflation. Mr Trump’s recent attempt to dismiss Fed governor Lisa Cook is being litigated in court this week, keeping the political risk front and center.
Context & Impact
Investors and central banks have added to gold holdings over recent years. Central-bank activity and private investor inflows have together supported the metal’s advance, as some traditional defensive assets — notably long-dated US Treasuries — no longer offer the same portfolio protection during equity sell-offs, according to institutional research groups.
For portfolios, a persistent erosion of Fed independence would change the risk profile of dollar assets and could encourage a broader shift into tangible stores of value. Asset managers are already reassessing allocations: Arun Sai of Pictet Asset Management said his team remains double overweight gold after recent events, reversing a prior inclination to scale back exposure.
- Market volatility: A move toward gold can amplify price swings in both bond and currency markets as capital reallocates.
- Inflation expectations: A politicised central bank could raise long-term inflation bets, lifting real assets such as gold.
- Reserve dynamics: Sustained outflows from dollar assets can test the dollar’s reserve role and prompt policy debates among global central banks.
Official Statements
“A scenario where Fed independence is damaged would likely lead to higher inflation, lower stock and long-dated bond prices and an erosion of the dollar’s reserve currency status,” said Daan Struyven, co-head of global commodities research at Goldman Sachs, summarising the bank’s risk framework.
Goldman Sachs / Daan Struyven
Unconfirmed
- Whether the courts will allow the White House to remove Fed governor Lisa Cook remains under adjudication this week.
- The exact scale and timing of private investor reallocation from US Treasuries to gold are hypothetical and depend on market sentiment and liquidity conditions.
Bottom Line
Gold’s recent gains reflect a broader search for diversification amid political risk. Goldman Sachs places $4,000 as its base-case target by mid-2026, while a substantial, sustained shift out of dollar assets could push prices much higher — potentially toward the $5,000-per-ounce stress scenario modelled by the bank. Investors should weigh liquidity, portfolio objectives and the conditional nature of these scenarios when adjusting exposures.