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Gold prices could head close to $5,000 an ounce as nervous investors seek safe havens amid Donald Trump’s war on the US Federal Reserve, Goldman Sachs has predicted.
The precious metal has been trading at record highs above $3,500 this week in the wake of the President’s unprecedented attempt to fire central bank board member Lisa Cook (pictured).
Trump has toyed with the idea of firing Fed chief Jerome Powell, too, and lambasted him for not cutting interest rates.
Analysts at Goldman Sachs said: ‘A scenario where Fed independence is damaged would likely lead to higher inflation , lower stock and long-dated bond prices, and an erosion of the dollar’s reserve currency status.’
Goldman’s baseline forecast is for the precious metal to hit $4,000 by the middle of next year, but it could go higher ‘should private investors look to diversify more heavily’ into gold.
In a research note, they said that if just 1 per cent of the privately owned market in US bonds were to flow into gold, the price ‘would rise to nearly $5,000’.
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