Gold is back in the spotlight after Goldman Sachs warned the price could approach $5,000 an ounce should U.S. President Donald Trump’s campaign against the Federal Reserve undermine trust in the dollar.
The bank’s commodities team outlined the risk in a research note, stressing that even a modest reallocation out of Treasuries could spark a major repricing in bullion. Spot gold recently touched a record high above $3,560 an ounce, extending a 35% rally year-to-date.
Fed at the Center of Market Anxiety
Trump has escalated his attacks on Fed leadership, attempting to fire Governor Lisa Cook and openly questioning Chair Jerome Powell’s credibility. Goldman notes that if these moves erode the institution’s independence, markets could see higher inflation, weaker long-dated bonds, lower equities, and a decline in the dollar’s reserve status.
Gold, in contrast, is insulated from political risk. “Gold is a store of value that doesn’t rely on institutional trust,” analysts wrote.
Forecast Range Expands
Goldman’s base case sees gold averaging $3,700 by year-end and $4,000 by mid-2026, supported by ongoing central bank purchases. A “tail risk” scenario could push prices to $4,500. But the extreme case – if just 1% of the privately held U.S. Treasury market shifts into gold implies a surge close to $5,000.
JPMorgan earlier floated a similar thesis, projecting gold could even reach $6,000 under comparable capital flows.
Investor Positioning
Money managers are already overweight bullion. Pictet Asset Management recently confirmed a “double overweight” position, citing political risk and dovish monetary expectations. Futures markets show near-certainty that the Fed will cut rates in September, adding fuel to non-yielding assets.
Takeaway
The metal’s ascent is no longer purely about inflation hedging or central bank demand – it is becoming a referendum on U.S. institutional stability. If the Federal Reserve’s independence is seen as compromised, the capital flight out of bonds could accelerate, leaving gold as one of the last safe harbors.
