Goldman Sachs continues to wave the bullish flag for gold and has raised its target price from the previous $2,700 to $2,900.

In a report, Goldman Sachs reiterated that it expects gold prices to continue setting new historical highs by early 2025, extending their record-breaking rally, and noted that in addition to rising geopolitical tensions (which favor safe-haven assets like gold), there are two factors that will drive gold prices higher—declining interest rates and seemingly insatiable demand for gold from central banks in emerging market countries.

Goldman Sachs raised its gold target price from $2,700 per ounce to $2,900, which implies a potential increase of about 9% from current levels, building on the 29% increase gold prices have already seen this year.

On Friday, spot gold climbed above the $2,660 level, supported by safe-haven demand triggered by conflicts in the Middle East.

Ajay Kedia, head of Kedia Commodities in Mumbai, said geopolitical tensions, especially between Israel and Iran, are supporting gold prices, and unless these risks recede, gold prices are likely to remain near record levels.

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Lina Thomas, a commodities strategist at Goldman Sachs, said, "We reiterate our long-term bullish recommendation for gold, due to the gradual boost from declining global interest rates, structurally higher central bank demand, and gold's safe-haven role against geopolitical, financial, and recession risks."

It is worth noting that Goldman Sachs has published several bullish reports on gold this year. Goldman analysts previously pointed out that gold, being the preferred risk hedge tool, has the highest likelihood of price increases in the near term, while other commodities are "more selective and lack constructiveness."

Goldman Sachs emphasized that since 2022, central banks in emerging market countries like China have been the driving force behind the structural increase in gold prices. Goldman estimates that from January to July this year, institutional demand in the London over-the-counter market has been strong, with an average annualized gold purchase volume of 730 tons, accounting for about 15% of global gold production annually. Thomas said:

"Central bank purchases in the London over-the-counter market are slowing down but remain at high levels, accounting for about two-thirds of the expected increase in gold prices to $2,900 per ounce by early 2025."

In addition to declining interest rates and strong central bank demand, given the multitude of risks currently present in the market, investors are very likely to prioritize gold, such as the upcoming U.S. presidential election, the potential outbreak of war between Israel and Iran, and the impact of several days of strikes at East Coast ports on data.Later on, the United States will release the latest non-farm employment data, and Federal Reserve Bank of New York President Williams and Federal Reserve Bank of Chicago President Goolsbee also plan to deliver speeches later.

Kedia added that if the non-farm employment report shows strong performance, it will be beneficial for the US dollar, and gold prices may experience some profit-taking. According to the CME Group's FedWatch tool, traders believe there is a 69% chance that the Federal Reserve will cut interest rates by 25 basis points in November.