Gold May Reach $5,000 if the Fed Standing is Damaged, According to Goldman Sachs

Gold could be on track for an extraordinary rally, potentially nearing $5,000 an ounce, if the Federal Reserve’s independence comes under threat and investors reallocate even a fraction of their Treasury holdings into the precious metal, according to Goldman Sachs Group Inc.

‍

In a recent research note, analysts led by Samantha Dart warned that undermining the Fed’s autonomy could set off a chain reaction across financial markets.

‍

“A scenario where Fed independence is damaged would likely fuel higher inflation, depress equity and long-dated bond prices, and weaken the U.S. dollar’s role as the world’s reserve currency,” the team wrote. “Gold, on the other hand, is a store of value that doesn’t depend on institutional trust.”

‍

Goldman laid out several potential trajectories for bullion over the next few years. Their base-case forecast calls for the metal to climb to $4,000 an ounce by mid-2026. In a more extreme “tail-risk” scenario, prices could push to $4,500. And if just 1% of privately held U.S. Treasuries were redirected into gold, the price could surge to nearly $5,000 an ounce.

‍

Bullion has been one of the best-performing major commodities this year, soaring more than 30% and setting a new record high earlier this week. The rally has been fueled by aggressive central-bank buying and growing market bets that the Fed is nearing a pivot toward interest-rate cuts.

‍

Fresh momentum has also come from the political front. President Donald Trump has sought greater control over the Fed, including efforts to remove Governor Lisa Cook, intensifying investor concerns about the central bank’s independence.

‍

Goldman’s analysts highlighted how sensitive the market could be to even small shifts in capital flows. “If just 1% of the privately owned Treasury market were reallocated to gold, we estimate prices would approach $5,000 an ounce, assuming all other factors remain unchanged,” they said. “That’s why gold continues to be our strongest long-term conviction trade within commodities.”

‍

The report, titled “Diversify Into Commodities, Especially Gold”, did not directly reference Trump’s recent clashes with the Fed or his critiques of its policy decisions. Still, the broader market has grown increasingly uneasy about political encroachments on monetary policy.

‍

Top global financial leaders have sounded alarms. European Central Bank President Christine Lagarde recently cautioned that any erosion of Fed independence would present a “serious danger” for the global economy, underscoring just how far-reaching the potential consequences could be.

‍

As of the latest session, spot gold was trading near $3,540 an ounce after trimming earlier losses. On Wednesday, it briefly set a new record above $3,578.

‍

The combination of central-bank demand, speculation on U.S. rate cuts, and concerns over Fed independence has created a powerful backdrop for gold’s ongoing rally. For investors, the precious metal is increasingly being viewed not just as a hedge against inflation, but as a safeguard against political and institutional risks that threaten the stability of global markets.

‍

Goldman Sachs’ bullish stance on gold highlights its unique role in today’s uncertain environment. With geopolitical tensions rising, U.S. monetary policy facing political pressure, and central banks around the world diversifying their reserves, the case for holding gold is stronger than it has been in years.

‍

For investors, the message is clear: while markets may remain volatile, gold offers a resilient store of value. If capital shifts out of Treasuries even modestly, the upside could be dramatic potentially propelling gold to heights few would have imagined just a few years ago.

‍