Sep 05, 2025

Goldman Sachs and JPMorgan are forecasting a potential increase in the price of gold to around $5,000 amid concerns about the Federal Reserve. They recommend investors diversify into commodities as inflation worries continue to grow. The market is closely monitoring President Trump’s influence on the Fed, as it could have significant impacts on various asset classes.

JPMorgan’s analysis suggests that increased short positions in ETFs tracking longer-dated U.S. government bonds reflect concerns about inflation and a challenge to Fed independence. In response to these worries, investors are turning towards value stocks in equities. The possibility of the Fed easing policy too much could benefit industrial commodities like copper and oil, with gold being viewed as a key asset in the ‘Fed independence trade’.

Goldman Sachs also advocates for diversifying into commodities, emphasizing the potential consequences of damaged Fed independence on inflation, rates, stock prices, and the Dollar’s reserve currency status. They highlight gold as a reliable store of value that is not dependent on institutional trust, proposing that an increased allocation by private investors could drive prices significantly higher. If just 1% of privately owned U.S. Treasury market funds were to flow into gold, prices could potentially reach close to $5,000 per troy ounce.

The market has seen gold reach record highs recently, with Goldman Sachs maintaining a strong recommendation for the precious metal. Developments related to the Federal Reserve are being closely watched as they could have wide-reaching effects on various asset classes and commodities. Investors are advised to stay informed and consider diversifying their portfolios to hedge against risks and capitalize on opportunities in the current market environment.

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