Gold once surged above the 2780 mark! Goldman Sachs issued another bullish report

On Wednesday, gold continued to hit new highs, briefly surpassing the 2780 mark, while silver prices also rose, standing above $34 per ounce, the highest level in over a decade.

Central bank purchases of gold have pushed prices up over 30% this year, with geopolitical tensions causing investors to focus on precious metals as a safe-haven asset, while silver has risen 37% during the same period.

Chris Vecchio, co-head of macro global at trading platform Tastylive, pointed out, “It’s clear that the momentum for gold and silver has been very strong in recent weeks and months, but we are really just entering the early stages of a multi-year shift towards precious metals.”

Investors are betting on precious metals, expecting the Federal Reserve and other central banks to continue cutting interest rates. In a low-interest-rate environment, the appeal of high-yield assets like bonds diminishes.

Additionally, precious metals are typically seen as a hedge against inflation. Although U.S. inflation has recently fallen to around the Fed's target level of 2%, there are still many pressures that could drive prices up in the long term, from potential additional tariffs to efforts to revitalize manufacturing.

Vecchio stated, “This ultimately means that there will be higher structural inflation and lower productivity in the future. Therefore, everything will become more expensive in dollar terms.”

Goldman Sachs analysts recently indicated that central bank purchases of gold will remain at “structurally high levels,” targeting $2900 per ounce.

Goldman Sachs has repeatedly issued bullish reports on gold, forecasting that by early 2025, gold prices will reach $2900 per ounce, up from a previous estimate of $2700. This optimism is largely attributed to a surge in gold purchases by central banks, especially those in emerging markets. Goldman further noted that since the Russia-Ukraine conflict, its expectations for central bank demand in the London over-the-counter market have increased fivefold, resetting the relationship between gold prices and interest rates.

The American investment bank's “still bullish” forecast also considers the role of speculators viewing gold as a safe haven amid rising prices, particularly ahead of the U.S. elections on November 5.

Although a decline in speculative positions in gold after the elections may pose a downside risk to prices, the bank emphasized that holding long positions in gold has significant hedging value amid potential trade tensions and financial risks. Goldman expects that by December 2025, gold prices will rise by about 10%, reaching $3000 per ounce.