Gold prices went on a roller coaster ride this week. After surging over 50% year to date to all-time highs near $4,400 per ounce, the precious metal had its worst one-day performance in a decade, tumbling over 6% on Oct. 21, and sparking debate over whether its epic run was over or investors should “buy the dip.”
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2025: 55.3%
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2024: 27.4%
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2023: 12.2%
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2022: 1.4%
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2021: -6.1%
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2020: 24.0%
Gold bug dip buyers did indeed show up, easing losses, but the yellow metal still finished the week down 3.5% — hardly reassuring.
Nevertheless, Goldman Sachs isn’t overly concerned, based on its updated gold price forecast for 2026.
The economy is at a crossroads, creating uncertainty. The Federal Reserve is torn between its dual mandate to encourage low unemployment and inflation.
The jobs market is weakening, as evidenced by rising layoffs and unemployment. Meanwhile, President Donald Trump’s tariffs are increasing costs, causing inflation to climb.
More Wall Street:
In August, the Bureau of Labor Statistics reported that unemployment was 4.3%, the highest since 2021. Challenger, Gray, & Christmas data show nearly 1 million layoffs this year, up 55% from the same period in 2024.
According to a study by Resume.org, 39% of companies have laid off workers, and 35% expect to cut workers before the year’s end.
At the same time, the Consumer Price Index reveals that inflation was 3% in September, up from 2.3% in April, before most tariffs kicked in.
The dynamic is pressuring the Fed, but most expect the weaker jobs market to remain its focus, given common thinking that the impact of tariffs on inflation will prove — dare I say it — transitory.
All the while, a mountain of U.S. debt, and a growing risk that foreign buyers may balk at continuing to buy it, has left many questioning the health of the economy.
As a result, Treasury yields have trended lower, especially since the Fed cut interest rates in September by a quarter-percentage point, and the U.S. Dollar has declined year over year.
The 10-year Treasury yield is 4%, down from 4.77% in early January. The U.S. Dollar Index has fallen to 99 from 109 over the period.
Both are good for gold, given that historically, gold prices have moved opposite to yields and the dollar.
Why? First, lower Treasury yields make them less interesting as a safe-haven alternative to gold. In addition, because gold is priced in U.S. Dollars, a lower Dollar makes the precious metal more attractive to foreign buyers, including central banks.
