Gold prices have experienced a significant surge, with New York gold futures reaching a historic high of $3,509 per ounce. This rise has prompted Wall Street to revise its forecasts for gold. JPMorgan predicts that due to U.S. tariffs and trade tensions with China, the likelihood of a U.S. economic recession is increasing. They expect gold prices to reach $3,675 per ounce by the fourth quarter of 2025 and surpass $4,000 per ounce next year.
Despite a temporary market sentiment recovery due to President Trump's softened stance on tariffs and statements about not dismissing Fed Chair Powell, analysts warn of underlying volatility. Trump's inconsistent policy statements could cause continued short-term fluctuations in gold prices, but the upward trend remains intact, providing potential entry points for investors.
Goldman Sachs believes the dollar is entering a prolonged decline, affecting U.S. bonds and stocks, as foreign investors reassess dollar-denominated assets. They forecast gold could reach $4,500 by the end of 2025 in extreme scenarios, with a baseline prediction of $3,300 to $3,700 by the end of this year.
The strong demand for gold from investors and central banks, averaging 710 tons per quarter, is another key factor driving prices up. John Paulson (Trades, Portfolio) highlights that global central bank purchases are a major driver of gold's rise, as countries seek to move away from fiat currencies.
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