On April 22, 2025, the gold market experienced an epic surge, with New York gold futures prices soaring to $3,509 per ounce on Tuesday, setting a historic high. This robust momentum led Wall Street to urgently adjust their expectations for gold prices. On Tuesday, JPMorgan stated that due to U.S. tariffs and the U.S.-China trade war, the risk of a U.S. recession has increased. They predict that by the fourth quarter of 2025, gold prices will reach $3,675 per ounce and surpass $4,000 per ounce next year.
However, with President Trump showing a more moderate stance on tariff policies later on Tuesday, reversing his comments about dismissing Federal Reserve Chairman Powell, market sentiment might recover in the short term, potentially depressing gold prices. Nevertheless, analysts believe the market remains full of uncertainties, especially with the Fed's independence under scrutiny, and hidden volatility in the gold market may persist.
Previously, Trump had publicly criticized Powell and threatened to dismiss him. However, on Tuesday, he reassured the market, stating he has no intention to fire Powell. This temporarily eased doubts about the dollar's credibility, yet did not completely allay investors' concerns. Market analysts believe that although gold prices may fluctuate in the short term due to uncertainties in Trump's policies, the upward trend remains unchanged, providing potential entry opportunities for investors.
Short-term fluctuations do not alter long-term trends
Kamakshya Trivedi, head of Global FX, Rates, and EM at Goldman Sachs, stated that the dollar has entered a long-term downward cycle, expected to decline along with U.S. bonds and stocks, as foreign investors reassess the risk-reward of dollar-denominated assets. This trend stems from the increasing risk of a U.S. recession, which has shaken investor confidence in dollar assets.
Earlier, Goldman Sachs projected that in the most extreme scenario, gold prices might reach $4,500 by the end of 2025. The bank's baseline forecast, however, expects gold prices to remain between $3,300 and $3,700 by the end of 2025.
JPMorgan noted that another key factor behind the rise in gold prices is the sustained strong demand from investors and central banks. The average net demand for gold each quarter this year has been 710 tons, and if demand continues to exceed expectations, the risk of further gold price increases will rise.
U.S. billionaire hedge fund manager John Paulson also emphasized the role of strong central bank buying globally, indicating that central banks' gold purchases are a crucial factor driving gold prices up. He pointed out that the global economy is seeking to move away from paper currency systems, and demand for gold as a reserve currency will continue to grow, a major trend that will not change.
Meanwhile, Ana Azuara from Grupo Financiero Base cautioned about Trump's trade offensives and doubts over the Federal Reserve, seeing these factors as continued drivers for risk-averse strategies in the market, further boosting gold prices.
