Gold is on course to hit S$3,000 by the end of next year, predicts Goldman Sachs, or roughly a 10% hike from the current price.
Fear (F), investment (I) and speculation (S) have driven the recent surge in the price of the metal and are set to underpin a further rise in the rice, believes the bank.
Goldman added its forecast is based on a new model based on these drivers called FIS-ical, which explains monthly price changes well by summing up physical gold demand from financial and monetary authorities, investors (ETF Holdings), and Speculators (net long managed money on COMEX).
“Using this model, we estimate that every 100 tonnes of additional gold demand lifts the gold price by 1.5%-2%.
“Structurally higher central bank demand (adding 9% by December 2025) and a gradual boost to ETF holdings as the Fed cuts the funds rate (adding 7%) outweigh the drag from our assumption that positioning gradually normalizes (subtracting 6%)."
Goldman adds that its new price forecast is slightly higher than its prior forecast for the remainder of 2024 and looks for slightly slower price gains in 2025 following the recent rally.
Spot gold today is US$2,781 an ounce.