Gold has been on a tear in 2025 up about 65% and now Goldman Sachs analysts are drawing comparisons to the dramatic gold run of the 1970s. Yet, unlike some past surges driven by pure speculation, their view is that this rally has a more durable foundation: central banks, institutional allocators, and structural demand, not just hype.
Below, I break down what Goldman is seeing, how this compares to past gold cycles, what risks lie ahead, and whether this run can continue.
The Big Picture: Gold’s 2025 Surge & the 1970s Echo
Gold’s performance this year has been nothing short of astonishing. At its peak, it breached $4,300 per ounce, marking one of the strongest rallies in modern memory.
What strikes analysts like Lina Thomas at Goldman Sachs is not just the pace, but the character of the rally. Instead of aggressive momentum or speculative mania alone, she argues, it’s grounded in real, sticky demand from entities that aren’t going away tomorrow.
That said, the comparison to the 1970s is not just poetic. In the 1970s, gold’s spike was partly fueled by the collapse of Bretton Woods, U.S. inflation, geopolitical stress, and a dollar under pressure. Today, similar themes are reappearing: inflation concerns, central banks diversifying reserves, geopolitical uncertainty, and shifting confidence in monetary regimes.
What’s Driving the Rally This Time: Fundamentals Over FOMO
What sets this gold run apart according to Goldman Sachs is that underlying demand is backing up the fireworks. Here are the main pillars behind that view:
Central Bank Accumulation
Central banks remain steadfast buyers of gold. Their purchases are not marginal they’re purposeful. When a sovereign entity diversifies its reserves toward gold, that’s not a casual trade it's a structural shift.
In prior years, central bank buying was a tailwind, but now many analysts see it as a core pillar of gold’s price support.
ETF & Institutional Flows
Beyond central banks, institutional investors and ETFs are entering the gold market in force. As rates begin to ease or real yields weaken, the relative attractiveness of gold (which pays no yield) becomes more compelling.
Goldman expects continued inflows into Western gold ETFs flows that are “sticky.” In other words, investors who go in now tend to stay in.
Structural Reserve Diversification
A key narrative is that many emerging market central banks are under-allocated to gold compared to developed nations. Over time, they may gradually increase gold holdings to hedge against dollar risks, reserve concentration, and systemic shocks.
Goldman models th at this ongoing diversification could sustain demand for years.
Rate Expectations & Real Yields
Gold’s “cost” is opportunity cost it doesn’t yield interest or dividends. So when real yields are rising, gold often underperforms. But if real yields decline either through rate cuts or inflation gold tends to benefit.
Goldman’s view is that rate cuts or lowered real yields will bolster further gold demand.
How This Compares to the 1970s Spike Parallels & Differences
| Factor | 1970s Gold Run | Today’s Gold Rally |
|---|---|---|
| Monetary regime shock | Nixon ended gold-dollar convertibility (Bretton Woods), unleashing free-floating gold | No comparable shock — but concerns over dollar strength, Fed credibility, and inflation are in play |
| Inflation surge | Double-digit inflation in many economies | Elevated inflation, though not as extreme |
| Speculative mania | Strong speculative runs, less institutional control | Speculation present, but more oversight and institutional demand |
| Central bank role | Some accumulation, but gold was less central in reserves | Central banks are major players this time, driving demand |
| Transparency & regulation | Less democratized markets, limited transparency | More accessible markets, broader participation, stronger feedback loops |
While the 1970s had pure monetary disruption baked in, today’s rally is more hybrid combining macro pressures, institutional reallocation, and safe haven demand.
Goldman’s Forecasts & What They See Ahead
Goldman Sachs has revised its targets upward in light of these dynamics:
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The bank now expects gold to hit $4,900 per ounce by end-2026
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It also sees a moderate upside through mid-2026, projecting another ~6% rise from current levels
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Their base case assumes continued strong central bank demand and ETF inflows, offset partially by speculative normalization
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In more aggressive scenarios e.g., Fed credibility weakening or accelerated reserve shifts they see tail-risk paths toward $5,000+
Their price models often treat every 100 tonnes of net purchases by conviction buyers (central banks, ETFs, institutional allocators) as roughly ~1.7% upward pressure on gold prices.
One catch: they expect speculative positions to “normalize” meaning some short-term volatility or pullbacks could occur.
Risks & Challenges That Could Temper the Run
Even well-backed rallies don’t climb straight up. Below are key risks to watch:
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Fed surprises / hawkish action: If the Fed holds rates high or signals further tightening, gold could suffer.
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Speculative unwind: If speculative long positions are crowded, a swift reversal could trigger sharp drops.
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Stronger real yields or dollar strength: If yields rise or the dollar strengthens unexpectedly, gold loses appeal.
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Central bank pullbacks: Though unlikely in the near term, if central banks slow accumulation, that demand driver weakens.
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Policy & geopolitical fixes: If inflation pressures ease or debt fears recede, some demand may rotate out of gold.
Goldman is watching these levers closely and built their forecasts to include moderate downside scenarios.
What This Means for Investors & Portfolios
If Goldman’s thesis holds, gold has room to run especially for investors seeking a hedge or diversifier. But it’s not just about owning bullion; the strategy and weighting matter. Here are some implications:
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Positions should lean medium- to long-term: Gold’s strength may play out over quarters, not days.
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Balance your allocation: Don’t overweight gold use it to hedge or diversify, not as a primary growth engine.
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Consider gold-linked instruments carefully: Physical, vaulting, ETFs, mining stocks each has different risk profiles.
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Watch correlations & flow shifts: Gold’s relationship to real yields, equities, and bonds may evolve; stay adaptive.
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Be ready for volatility: Pullbacks are likely. Having stop-losses or tactical buffers can help.
Echoes of the Past, Demand for the Future
Goldman Sachs isn’t necessarily saying we’ll relive the exact 1970s gold mania. What they are saying is that this is one of the more structurally supported gold runs we’ve seen in decades one where central banks and institutional demand are doing the heavy lifting, not just speculative fervor.
If you believe in that thesis, gold may still be underpriced in many portfolios today. But success won’t come from blind faith. It will come from disciplined risk management, timing, and a clear understanding of what’s driving this rally.
