Gold Prices Could Hit $5,000 If This Happens, Says Goldman

Gold prices have enjoyed another leg higher in the past few weeks, gaining close to 9% in a month, thanks in part to hope for a dovish tilt in the Federal Reserve as it gets ready to reduce interest rates. Of course, weaker job numbers, pressure on the U.S. dollar, and questions about what the future holds for the Fed’s independence have also given the shiny yellow metal a nice shot in the arm after spending much of the summer trading sideways.

Of course, tariffs and central bank buying around the world, especially in China, which has resumed its purchases, have also been major drivers of gold prices lately. Indeed, it seems like a Goldilocks scenario has unfolded for gold in recent weeks. And the run may not be over, as geopolitical tensions remain escalated following news of the Qatar strikes. In many ways, it seems like the case for owning the safe-haven asset is getting stronger by the day.

Goldman Sachs has a $5,000 per ounce conditional price target for gold in 2026

And while many big-name pundits see gold rising to $3,800 in the medium term, which entails another 3% in upside from current levels, Goldman Sachs (NYSE:GS) actually thinks the metal could be headed to $5,000 per ounce next year if the Fed’s independence is compromised. For now, $5,000 per ounce is highly conditional and is more of a bull-case scenario than anything else.

Indeed, with Fed Governor Lisa Cook’s firing blocked for the time being, questions linger as to what could be next as the Trump administration calls for lower interest rates. Indeed, it’s hard to know what to make of the matter, but in light of all the question marks at home and abroad, I think it’s only prudent to at least have some (perhaps a single-digit percentage) stake in gold as a hedge.

Add a potential comeback in inflationary pressures as the Fed cuts rates into the equation, and the case for holding gold couldn’t be stronger. As for $5,000 per ounce, I think it’s a very realistic possibility, even if it’s not the base case for analysts over at Goldman. Sure, gold is already up an incredible 37% so far this year and around 45% in the past full year. But if the Fed’s independence does wind up on the ropes, I don’t think we can rule out another 37% gain in the shiny yellow metal.

In the meantime, gold bugs shouldn’t get too excited, especially considering Goldman’s base case sees gold at $3,700 by the end of this year, pretty close to the consensus target. Additionally, with the Fed already signalling a dovish pivot in response to the weak jobs numbers, I just don’t see the Fed’s independence as at risk. Indeed, as long as rate cuts happen (and I think they will), we probably won’t hear as much about concerns revolving around the independence of the Fed.

How can investors invest in gold amid the latest bullish ascent?

Even if the conditions aren’t met to make $5,000 per-ounce gold a reality, I think those light on the precious metals may still wish to get some exposure, either via gold ETFs, gold mining ETFs, or the gold miners themselves. Of course, there’s also physical bullion, but given the risks of storing it in the home, I’d much rather go the ETF or stock route. At this juncture, a well-run large-cap miner like AngloGold Ashanti (NYSE:AU) really stands out as a way to place a levered bet on gold’s strength.

The South African-based gold miner has stood tall this year, rising a whopping 166% year to date. After a solid 4.3% gain on Wednesday, investors may be wondering if the red-hot miner is still worth buying. I think it is. Production is marching higher at a time when gold is scorching hot. With much-improved operating efficiencies and an incredible surge in free cash flows, I see AU stock as a way to score a bountiful 1.5% dividend yield and continued capital gains as gold adds to its strength in the new year. 

Sure, investors might be chasing here, but with production and prices rising hand-in-hand, the miner is perhaps the highest upside way to bet on gold today. Furthermore, shares still look cheap at 17.1 times trailing price-to-earnings (P/E). Even without $5,000 per-ounce gold, AU stock looks poised to shine!