Gold Surges Amid FED Uncertainty and U.S. Treasury Market Shifts

Gold prices have soared to record highs, climbing above $3,549 an ounce—a 40% surge in just one year. Investors are flocking to the metal as pressure mounts on the Federal Reserve, the U.S. Treasury market weakens, and global uncertainty rises. Goldman Sachs predicts Gold could reach $5,000 if private Treasury assets shift even marginally into the metal.

The Fed's perceived vulnerability is a key driver. Analysts warn that any erosion of its independence could accelerate a flight from Treasuries into gold, further weakening the dollar and stoking inflation. Central banks are already diversifying reserves away from the dollar, with ECB President Christine Lagarde calling Fed politicization a 'serious danger' for markets.

Goldman outlines three scenarios: a base case of $4,000 by mid-2026, $4,500 in a more extreme outlook, and $5,000 if just 1% of private Treasury holdings MOVE into gold. The U.S. Treasury market's sheer size makes this a plausible catalyst.