Gold has surged 35% this year, climbing above $3,500 per troy ounce and cementing its position as one of the best-performing major assets in global markets. The precious metal has attracted both investors and central banks seeking shelter from political uncertainty and mounting debt concerns. Traditional safe havens such as the US dollar and government bonds have struggled, making gold the asset of choice for many.
Concerns Over the Federal Reserve
According to a report from The Financial Times, a major driver of the latest rally is growing unease around the independence of the US Federal Reserve. Investors fear that if political influence undermines the Fed’s decision-making, it could lead to looser monetary policy, higher long-term inflation, and further pressure on the dollar and US Treasuries.
Donald Trump’s attempt to dismiss Fed governor Lisa Cook — now facing a court challenge — has highlighted tensions between the former president and the central bank. Goldman Sachs has warned that if Fed independence is weakened, the outcome could be “higher inflation, lower stock and long-dated bond prices and an erosion of the dollar’s reserve currency status.”
Goldman Sachs Forecasts $5,000 Gold
Goldman Sachs’ base case projects gold reaching $4,000 per troy ounce by mid-2026. However, analysts see potential for a sharper rise if investors significantly shift away from US dollar assets. According to Daan Struyven, co-head of global commodities research at Goldman, a move of just 1 per cent of privately held US Treasuries into gold could drive prices close to $5,000.
“Gold is a store of value that doesn’t rely on institutional trust,” Struyven explained, highlighting why the asset is attracting renewed attention.
Institutional Confidence in Gold
Asset managers and central banks are reinforcing this trend. Arun Sai, a portfolio manager at Pictet Asset Management, said his team remains “double overweight gold” despite initially considering reducing exposure. Trump’s renewed confrontation with the Fed, he added, gave them confidence to maintain the position.
Meanwhile, central banks have steadily boosted their gold holdings since Russia’s full-scale invasion of Ukraine in 2022. This demand, alongside private investment, has contributed to the sharp price rise. BlackRock analysts recently described gold as a “reliable diversifier” in an era where US Treasuries no longer provide consistent protection during market downturns.
A Neutral View: Gold’s Role Amid Uncertainty
Gold’s rise reflects more than just market speculation. It signals deep unease about global stability, the resilience of the dollar, and the role of institutions like the Federal Reserve. If political pressure continues to weigh on central bank independence, gold’s reputation as a safe store of value will likely strengthen further.
However, while predictions of $5,000 gold are striking, they rely on scenarios that assume significant investor flight from dollar assets. Much will depend on whether the Fed can maintain credibility in the face of political challenges. For now, gold remains one of the few assets investors appear to trust in uncertain times.
