Goldman Sachs has abandoned its bets on multiple commodity investments, but believes that gold is one of the few commodities with recent upward potential.

Goldman Sachs raised its gold price forecast on Monday, raising its forecast for the average gold price in 2024 from $2357 per ounce to $2395 per ounce, and for 2025 from $2686 per ounce to $2973 per ounce.

Goldman Sachs is bullish on gold prices due to interest rate cuts in some Western countries, gradual increase in exchange traded fund (ETF) flows, and increased central bank purchases.

Goldman Sachs reiterated its recommendation to go long on gold, as global interest rate cuts, structural increases in central bank demand, and the benefits of gold hedging against geopolitical, financial, and economic recession risks will gradually provide a boost

First, analysts said, "Since the middle of 2022, the central bank's purchase has tripled due to concerns about US financial sanctions and US treasury bond issues. We believe that this is structural and will continue, whether publicly reported or not."

They also said, "The imminent Fed rate cut will prompt Western capital to re-enter the gold market, which has been largely untouched by the significant rise in gold prices over the past two years

Finally, analysts say that gold "provides significant hedging value for investment portfolios against geopolitical shocks including tariffs, Fed subordination risks, and debt concerns

Goldman Sachs said, "Our forecast for demand from central banks and other institutions in the London over-the-counter market (OTC) shows that as of July, gold buying remains strong, with an average annual purchase volume of 730 tons so far this year, accounting for approximately 15% of the estimated global annual production, with a large portion of buying coming from China

Goldman Sachs stated that although the central bank's buying in the London over-the-counter market has slowed down, it is still considerable, which could contribute two-thirds of the expected increase in gold prices to $2900 per ounce by early 2025.

Goldman Sachs analysts say that the remaining one-third is expected to see a gradual increase in EFT fund flows after the Federal Reserve cuts interest rates.

Besides Goldman Sachs, there are also other investment banks that are bullish on gold. Bank of America maintains a bullish outlook on gold, expecting gold prices to reach $3000 per ounce next year.

Daily chart of spot gold