Gold prices could climb to almost $5,000 an ounce if Donald Trump’s attacks on the Federal Reserve damage the US central bank’s independence, Goldman Sachs has predicted.
Gold has rallied 35 per cent this year to more than $3,500 per troy ounce, making it one of the world’s best performing major assets. Investors and central banks have piled into the precious metal as they seek protection from political uncertainty and debt worries that have send traditional havens such as the dollar and government bonds tumbling.
Fears that the US administration could erode the independence of the world’s most important central bank have fuelled the latest flows into the metal, which is traditionally viewed as a hedge against inflation. Investors are concerned that a politicised Fed would be more inclined to cut interest rates than would otherwise be the case, sending long-term inflation expectations higher and undermining Treasury prices.