Goldman Warns: If the Fed Gets Politicized, Gold Could Rocket Toward $5,000

Gold’s hot streak may have a lot more room to run—especially if the White House keeps leaning on the US Federal Reserve.

Goldman Sachs says bullion could surge to nearly $5,000 an ounce if President Donald Trump’s attacks on the central bank meaningfully dent its independence. The logic: a politicized Fed is more likely to cut rates, stoke higher long-term inflation expectations, rattle Treasuries and equities, and chip away at the dollar’s reserve-currency aura—all of which make gold more attractive as a store of value.

That tail-risk call sits on top of an already bullish base case. Gold has jumped about 35% this year to above $3,500—recently touching a record near $3,578—as investors and central banks piled in amid policy uncertainty, war, and debt angst. Goldman’s “plain vanilla” forecast sees prices at $3,700 by end-2025 and $4,000 by mid-2026, assuming continued central-bank buying. But if private investors start dumping even a sliver of US dollar assets for bullion, the move could turn dramatic: Goldman estimates that a 1% shift out of privately held US Treasuries into gold would push prices close to $5,000.

The latest catalyst: the administration’s escalating fight with the Fed—most recently, an attempt to remove Governor Lisa Cook, now in court. Markets worry that a cowed central bank would cut sooner and faster, pulling down real yields and juicing gold. As one Goldman strategist put it, gold doesn’t rely on “institutional trust,” which is precisely the point when institutions look shaky.

Big allocators are leaning in. Pictet Asset Management says it’s “double overweight” gold and, after the recent Fed drama, expects “another leg up.” BlackRock’s research arm, meanwhile, argues that in a world where long-dated Treasuries no longer hedge equities like they used to, reliable diversifiers are scarce—another way of saying gold’s portfolio job just got more important.

A few mechanics behind the mania:

• Rates & the dollar: Lower policy rates reduce the opportunity cost of holding non-yielding metal; a weaker dollar usually boosts dollar-denominated gold.
• Central banks: Reserve managers have been steadily adding to gold since 2022, seeking assets outside the sanctions-exposed dollar system.
• Geopolitics & growth jitters: Wars, tariff threats, and wobbly fiscal pictures in major economies have turbo-charged safe-haven demand.

None of this makes gold risk-free. If inflation cools without political interference—and the Fed stays clearly independent—real yields could firm and the rally could pause. But as long as Washington keeps second-guessing the central bank and investors keep questioning the dollar’s “risk-free” franchise, the path of least resistance points higher.

Gold is already the market’s shock absorber of choice. Undermine the Fed, and it could become the market’s runaway trade.

With input from the Financial Times, Reuters, and Al Jazeera.