Investing.com-- Goldman Sachs hiked its outlook for gold prices to $3,700 an ounce, stating that heightened concerns over the U.S. economy- amid an escalated U.S.-China trade war- made the yellow metal appear more attractive as a recession hedge.
Goldman Sachs hiked its gold price target to $3,700/oz by end-2025, its third such hike this year. The investment bank had in March hiked its 2025 gold price target to $3,300/oz.
Goldman Sachs warned that in an extreme risk case, gold could reach as high as $4,500/oz by end-2025.
The investment bank said in a note dated to Friday that it was hedging against increased risks of a U.S. recession with gold, noting that both exchange-traded funds and physical demand for bullion had risen in recent weeks.
This came as the U.S. engaged in a rapidly escalating trade war with China over the past week. The U.S. hiked its tariffs on Chinese imports to a cumulative 145%, drawing a sharp rebuke from Beijing, as well as Chinese tariffs on American goods of as much as 125%.
U.S. President Donald Trump also outlined plans for steep “reciprocal” tariffs against major U.S. trading partners, although he postponed imposing these by 90 days. But Trump still imposed a 10% universal tariff, and also said that targeted tariffs on electronics and pharmaceuticals were coming soon.
An escalating U.S.-China trade war saw gold surge to a record high of $3,245.69/oz last week, with physical and ETF demand for the yellow metal remaining high.
Several major global central banks, especially in Asia, were seen increasing their gold purchases in recent months. This also came amid heightened concerns over a U.S. recession, especially in the face of economic uncertainty under Trump.