Goldman Sachs says gold could surge if Fed’s credibility damaged

Gold could rally to almost $5 000 an ounce if the Federal Reserve’s credibility were damaged and investors shifted just a small portion of holdings from Treasuries into bullion, Goldman Sachs Group said.

“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,” analysts including Samantha Dart said in a note. “In contrast, gold is a store of value that doesn’t rely on institutional trust.”

Goldman’s note outlined a range of possible outcomes for the metal, with a baseline forecast for a surge to $4,000 an ounce by mid-2026; a so-called tail-risk scenario of $4 500; and an estimate of almost $5 000 if just 1% of the privately-owned US Treasury market were to flow into gold.

Bullion has been one of the strongest performing major commodities this year, rallying by more than a third and hitting a record earlier this week. The advance has been powered by central-bank accumulation and bets that the Fed will soon start to reduce US interest rates. Additional support has come more recently as President Donald Trump moved to assert greater control over the Fed, including a push to oust Governor Lisa Cook.

“We estimate that if 1% of the privately owned US Treasury market were to flow into gold, the gold price would rise to nearly $5 000 an ounce, assuming everything else constant,” the analysts said. “As a result, gold remains our highest-conviction long recommendation in the commodities space.”

© 2025 Bloomberg

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