Gold just smashed through $3,500 an ounce, its highest level ever. That kind of move always grabs attention, but the real question is why traders and investors are piling into the metal. Usually, gold shines when interest rates are low because it isn’t competing with high yields on bonds. It’s also a classic “risk-off” hedge when stock markets turn down. But this latest surge may be telling us something different.
The “R” word and gold…
Traders and investors could be buying gold not just because rate cuts are on the horizon, but because they worry those cuts signal a potential recession.
Historically, recessions and rate-cutting cycles have been a sweet spot for gold.
• 2020: As the Fed slashed rates ahead of the pandemic-driven recession, gold surged while stocks sold off.
• 2008: During the Great Recession, gold gained ground as stocks struggled.
• 2000: When the dot-com bubble burst, the Fed cut rates, stocks tanked, and gold rallied.
All these cases had one thing in common: deep, sustained rate cuts during recessions.
Now, gold’s rally is also tied to President Trump’s attempts to exert more control over the Fed, including efforts to oust Governor Lisa Cook.
And for Goldman Sachs, that’s another huge catalyst for even higher gold prices.
$5,000 gold?
Goldman Sachs is painting a bullish picture for gold. In a new note, the bank said the metal could climb to nearly $5,000 an ounce if confidence in the US Federal Reserve takes a hit and investors start shifting money out of Treasuries into bullion. Their base case is still very strong, calling for $4,000 by mid-2026, with a “tail risk” scenario of $4,500.
The reasoning is straightforward: if Fed independence comes under political pressure, that could mean higher inflation, weaker stocks and bonds, and a dollar that loses some of its global appeal. In that environment, gold’s role as a store of value that doesn’t rely on institutional trust becomes even more attractive.
Even if just 1% of privately held Treasuries were to rotate into gold, that alone could push the price close to $5,000. No wonder they’re calling gold their highest-conviction long trade in commodities right now.
And if they’re bullish on the gold price, then investors may like gold mining stocks even more. They’re leveraged to the gold price, meaning if bullion rises, miners’ profits often climb even faster.
Already in 2025, record high gold prices have sent JSE gold miners soaring…
• Harmony – up 68%
• AngloGold – up +142%
• Goldfields – up +141%
• Pan Af – up 95%
• DRD Gold – up +120%
If gold continues to climb, then these gains may be just a teaser of what’s to come.
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