Gold Prices Surge Amid Tariff Threats and US Debt Fears
Gold futures soared to new highs on Friday, prompting Goldman Sachs analysts to maintain their bullish stance on the precious metal. The analysts emphasized the potential impact of impending US tariffs against Mexico and Canada on the investment landscape.
"Increased uncertainty in US policy reinforces the diversification potential of commodities in investment portfolios," the analysts asserted. "We continue to recognize the value of long gold positions as a hedge against various tail risks."
Goldman Sachs identified tariff escalation and concerns over US debt as significant factors anticipated to drive gold prices higher. Bullion futures climbed beyond $2,860 per ounce on Friday, marking their fifth consecutive week of gains.
President Donald Trump has announced plans to impose tariffs on Mexico and Canada by February 1, raising the possibility of a trade war and its potential impact on economic growth.
"An escalation in tariffs would further bolster active investor positioning in gold, enhancing the base case price support we anticipate," Goldman analysts stated.
Despite the Federal Reserve's decision to maintain interest rates, gold prices have risen approximately 6% year-to-date, extending their 27% gain from 2024. Strong demand from international central banks and inflows into gold-backed ETFs have contributed to the precious metal's rally.
"We reaffirm our high conviction in maintaining long gold positions, driven by underlying structural factors related to central bank purchases and cyclical factors associated with ETF inflows," the analysts said. They reiterated their price target of $3,000 per troy ounce by the second quarter of 2026.