The recent decline in gold prices offers investors the chance to buy, and the bullish case for gold remains as strong as ever, according to analysts at Goldman Sachs.
The banking giant’s analysts see the sell-off in gold as an entry opportunity, and they continue to recommend long positions in the metal as their “highest-conviction view in commodities.”
Goldman attributes the dip in gold prices to short-term technical factors such as position liquidations due to the equity market sell-off, along with some rotation into alternative assets, but the bank sees firm support for gold over the medium term.
The analysts believe the U.S. government’s ‘reciprocal tariffs’ will weigh on global growth, and they reinforce the case for defensive assets like gold.
“We maintain our $3,300/oz gold year-end forecast – and our forecast range at $3,250-3,520, reflecting mostly upside risks to investors’ positioning,” Goldman analysts wrote in a note. “We continue to see risks relative to our forecast skewed to the upside.”
Further support for the yellow metal will come from structural demand from emerging market central banks, along with increased inflows into exchange-traded funds (ETF) due to recession fears and Federal Reserve rate cuts.
They also noted that gold and other precious metals were exempted from the new tariffs, and they do not expect the Trump administration to tariff it in the future.
For industrial metals, Goldman sees near-term risks for copper, which could push prices below $9,000 per ton in Q2, particularly if trade tensions continue to escalate.
But gold remains the bank’s projected standout asset, with the bank seeing the combination of macroeconomic risks and relatively light investor positioning setting the stage for further gains. “We see this – as well as other potential dips in the gold market – as an opportunity for investors to go long gold,” the analysts said.
Gold prices have turned negative on the session, but spot gold continues to hold above the $3,000 level at the time of writing, even as equity markets stage a modest recovery.
Spot gold last traded at $3,004.16 per ounce for a loss of 1.11% on the daily chart.
Source: Ernest Hoffman Kitco
