Is it true that now Goldman Sachs has upgraded the price target for gold?

Goldman Sachs, in its latest update on gold prices, has given an aggressive target of $2,500/oz by the end of the year 2022. That is a 25% upside from the current price levels. What is interesting is that gold has already appreciated 18% till date this year, so Goldman is basically pencilling in about 48% spike in gold prices overall in the year 2022. Remember, Goldman also has very aggressive targets on crude oil and on Fed rate hikes.

Gold is known to be a safe haven asset and generally sees a lot of buying in uncertain market conditions. Currently, amidst the uncertainty caused by the ongoing Russia-Ukraine conflict, Goldman sees enough gold emerge as the preferred asset class. It sees headroom for gold to spike another 25% to $2,500 per troy ounce. Demand is likely to be driven by a combination of ETF buying, central bank buying and retail demand.

For gold ETFs, Goldman had projected total inflows of 600 tons of gold into ETFs. The first 2 months have already seen 300 tonnes of gold inflows into ETFs, so the final figure could be much larger. In the year 2010-11, gold had seen a similar combination of factors and at that point of time it had rallied by 70%. As a result, Goldman has upgraded its 6 month target by over 15% higher for gold.

There are 2 interesting points made by Goldman in its gold report. Firstly, it expects the traditional negative relationship between interest rates and gold to be disrupted. That means we could have gold prices rising in tandem with the rise in global interest rates. Secondly, Goldman sees a lot of global central banks, including the Russian central bank, preferring gold over dollar assets for reserves. Even consumer demand for gold from China and India is expected to be robust this year.