Goldman Sachs is more bullish on gold than ever before. It has raised its forecast for gold prices to $3,700 an ounce by the end of 2025, its third such hike this year. On January 1, 2025, gold was $2,623. If gold closes at $3,700 by the end of 2025, it will have delivered 41%.

According to Goldman Sachs, gold might hit $4,500/oz by the end of 2025 in a high-risk scenario. That means gold may end 2025 with a staggering return of 71.5%! Gold currently trades at $3,200, up by 22% so far in 2025. In India, the cost of gold today is Rs 93,280.

In February, Goldman Sachs predicted the gold price would reach $3,100 by the end of 2025, while the firm had forecast that it would touch $2,890 by then.

But what makes Goldman Sachs and other gold market participants bullish on gold? As concerns about the US economy and the growing trade war between the US and China grew, the yellow metal became increasingly attractive as a recession hedge solution.

Gold is emerging as the best bet in the current economic environment. With the increased possibility of a US recession, demand for gold is expected to be driven by exchange-traded funds as well as physical demand. The rally in gold is also expected to continue amid demand from central banks.

Gold becomes the most sought-after asset class during uncertain and global risk periods, driving up gold prices.

Many analysts have predicted a significant increase in the gold price in 2025. However, occasional profit-booking in the yellow metal cannot be denied in the short term.

US Fed rate cuts in 2025 will also help boost gold prices. Another development that could push the gold price higher is the higher amount of selling seen in the US Treasuries. When bonds are offloaded, the 10-year yield rises, sending a signal that even the US Treasury is no longer a safe place to park funds. In such a scenario, gold finds new buyers and the price shoots up.

Overall, in 2025, unless the factors that are pushing the gold price higher change, the price of the yellow metal is expected to keep going higher.

Also Read: Gold is surging again. 3 factors could push it even higher…