Goldman Sachs Says Gold Could Reach $5,000 if Fed Independence Erodes

Goldman Sachs analysts warned that gold prices could climb to $5,000 per troy ounce in a scenario where the Federal Reserve’s independence is undermined, citing the metal’s role as a store of value amid rising political risk.

The bank said that damage to Fed independence would likely produce higher inflation, weaker stock and long-dated bond prices, and an erosion of the dollar’s status as the world’s principal reserve currency. Goldman noted that gold does not rely on institutional trust and said it remains the firm’s "highest-conviction long recommendation in the commodities space."

Gold has been one of the strongest major assets this year, rising about 35% to trade above $3,500 per troy ounce, the note said. Goldman analysts including Samantha Dart framed the $5,000 projection as a contingent outcome tied to political developments that could weaken confidence in U.S. institutions and monetary policy.

The analysts linked the scenario to mounting tensions between the White House and the Fed, pointing to public disputes over monetary policy and calls for more immediate interest-rate cuts. Those frictions, Goldman said, could increase the market’s appetite for non-institutional stores of value such as gold.

Goldman’s outlook comes as investors weigh a widening set of risks, including persistent inflation pressures and debates over the appropriate timing and magnitude of rate moves by the Fed. In the note, the bank outlined a chain of effects that could follow weakened central-bank autonomy: rising inflation expectations, falling real yields, weaker equities and diminished confidence in the dollar.

Precious metals traders and portfolio managers often turn to gold as a hedge when real yields decline or when confidence in fiat currencies weakens. A move to $5,000 per ounce from current levels would represent a substantial premium and reflect a pronounced shift in investor sentiment and macroeconomic expectations.

Goldman’s recommendation underscores the bank’s view of gold as a strategic hedge against scenarios that impair institutional trust. The firm’s analysts said the metal’s appeal would be reinforced if markets perceive that political interventions are constraining independent monetary policymaking.

Market participants will watch official statements from the Fed and the White House for signs about the future course of monetary policy and any potential shifts in the institutional guardrails that underpin investor confidence. For now, the bank’s note positions gold as a primary beneficiary of a specific downside risk to the dollar and risk assets.