Goldman: If Trump destroys Fed credibility, gold could hit $5,000
The bank says the metal could hedge the increased inflation, currency weakness, and poor stock and bond performance typically associated with central banks run by politicians.
Gold could serve as a hedge for investors as President Trump continues his push to take political control of the quasi-independent Federal Reserve, analysts at Goldman Sachs say.
In a note published Wednesday, Goldman commodity analysts wrote:
“A scenario where Fed independence is damaged would likely lead to higher inflation, higher long-end rates (lower bond prices), lower stock prices and an erosion of the Dollar’s reserve currency status. In contrast, gold is a store of value that doesn’t rely on institutional trust. Should private investors look to diversify more heavily into gold, as have central banks, we see potential upside to gold prices even above our tail risk scenario of $4,500/toz, which itself is already well above our $4,000 mid-2026 baseline, given the very small size of the physical gold ETF market relative to Treasury bonds, at only 1%.
For example, we estimate that if 1% of the privately owned US treasury market were to flow into gold, the gold price would rise to nearly $5,000/toz, assuming everything else constant. As a result, gold remains our highest-conviction long recommendation in the commodities space.”
A romp to $5,000 — which, to be clear, Goldman analysts characterize as a “tail risk” scenario — would represent a roughly 40% increase from yesterday’s New York spot closing price of $3,559.26 an ounce, according to FactSet.
But the Trump effect has likely already helped bolster prices for the metal, which has risen more than 35% in 2025, supercharging performance of gold miners like Newmont Corp., which has doubled so far this year.
Since returning to power in January, the Trump administration has launched a multifront push that has eroded the Fed’s long-standing status as the independent arbiter of US monetary policy.
Those efforts have moved from first publicly mocking Fed Chair Jerome Powell and demanding interest rate cuts — something presidents of both parties have largely refrained from for decades — to legally questionable firings of important Fed officials and efforts to install political allies who have called for more political control over the Fed in top roles at the bank.
It’s unclear whether those efforts will be completely successful. Federal Reserve Board member Lisa Cook — whom the president has attempted to fire, citing unproven allegations of mortgage fraud — is suing to block the White House’s actions.
But if they are successful, it would mean “the end of central bank independence as we know it,” University of Pennsylvania Fed expert Peter Conti-Brown told The New York Times.
And given recent historical record of politicized central banks — take Turkey for example, where inflation has recently come down(!) to a 33% annual rate — having a bit more gold on hand might come in handy.
