Financial Experts: Economic Factors Boost Gold's Potential to Surpass $4,000

Financial experts assert that gold reaching the $4,000 mark is a realistic possibility. However, caution is needed as any stability in the global economy or increased investor confidence in high-risk assets may slow gold’s upward trajectory, alongside the potential slowdown in central bank purchases due to higher gold reserves compared to other assets.

Experts told Union that numerous factors bolster gold’s upward potential, primarily the Federal Reserve initiating interest rate cuts and persistent global inflation rates elevating gold's appeal as a safe haven to protect wealth from the erosion of purchasing power. Additionally, the depreciating dollar against major currencies and increased central bank purchases will make gold more attractive to investors, alongside escalating economic and political uncertainty in the coming years.

The current stability near the $3,700 level seems more like a formative stage rather than a sign of momentum depletion. According to Deutsche Bank, it raised its gold price forecast for next year to $4,000 per ounce. This is due to favorable foreign exchange and interest rates that could drive gold prices higher. Bank of America also indicated that geopolitical disputes might push gold towards $4,000.

Ahmed Osama, Chief Economic Analyst at Evest, confirmed that gold reaching $4,000 is likely amid the recent Federal Reserve's 25 basis points interest rate cut, with market expectations for a 50 basis point cut before the end of 2025. This anticipated rise is corroborated by ongoing declines in U.S. labor market figures pressuring the Federal Reserve to stimulate markets through interest rate cuts, positively impacting gold prices.

Osama noted that a depreciating dollar will render gold more appealing to international investors, especially with continued strong central bank purchases, particularly in emerging markets. However, he warned that any global economic stability or improved investor sentiment toward high-risk assets may decelerate gold’s rise. He emphasized that even though reaching $4,000 isn't imminent, it remains plausible if economic and political uncertainty persists.

Olie Hansen, Head of Commodities Strategy at Saxo Bank, stated that gold has grown by 40% this year, nearing its strongest performance since 1979. This highlights heightened investor anxiety towards the global economy, particularly the U.S. The positive long-term outlook for gold endures, backed by fundamental factors like a weakening U.S. dollar, reducing financing costs, and increased investor attraction for safe assets with the Federal Open Market Committee entering a new rate-cutting phase.

The inflow into exchange-traded funds (ETFs) towards gold in 2025 surpassed the combined outflows of the previous two years, signifying a restored confidence and interest in this strategic asset. However, Hansen mentioned potential hurdles like slowed central bank purchases with rising gold reserves relative to other assets, possibly prompting purchase reduction.

Conversely, the risk of direct political interventions in monetary policy decisions or even attempts to control central bank directions could lead to inflated inflation expectations and broader doubts about U.S. financial sustainability. Hansen projected that if this scenario materializes, gold could exceed its short-term $4,000 goal, driven by strong investment demand, structural economic fears, and mounting geopolitical and financial disruptions. Gold remains a preferred sanctuary for investors safeguarding capitals amid heightened uncertainty and systemic risks.

Vijay Valecha, the CEO of Investments at Century Financial, noted gold currently trades near $3,700 per ounce, reflecting more of a formative phase than momentum exhaustion, especially with the Federal Reserve's interest rate cut announcement. An initial reaction caused a temporary dollar rise and gold decline.

Gold has shown significant resilience against various pressures, enduring the strong dollar and a relatively cautious reaction from the Federal Reserve without price disruptions. It demonstrates the strong underlying market support for gold. Current investor positions afford gold extra room for growth, as holdings in ETFs and long contracts are still well below previous peaks, allowing for further gains.

Despite potential short-term corrections, the possibility of gold reaching or exceeding $4,000 remains robust, primarily driven by continued monetary easing and persistent geopolitical risks acting as catalysts for elevation. Political factors further enhance gold’s appeal as a safe haven, especially concerns about the Federal Reserve’s independence, bolstering gold's value as a hedge against risks.