Tariff concerns are pushing gold to new highs again. Goldman Sachs predicts it could rise to $3,000 next year, but there may be a short-term pullback.

Gold spot prices reached $2,885 per ounce on Friday, hitting a new high. According to financial blog ZeroHedge, concerns about tariffs have pushed market positions to the 91st percentile since 2014, consistent with Goldman Sachs' estimate that tariff hedging has driven a 7% peak price increase. Goldman Sachs commodity research team stated in a recent report that if tariff uncertainty subsides and market positions return to normal, gold prices may see a moderate tactical pullback. While Goldman's baseline forecast is for gold prices to gradually adjust before the second quarter of 2026, a rapid return of speculative positions to long-term averages could push prices down to $2,650 per ounce (a 7% decline). Meanwhile, central bank gold purchases (expected to drive a 11% price increase by Q2 2026) and gradual increases in ETF holdings (expected to bring a 4% increase during the same period), along with rate cuts from the Federal Reserve, continue to support Goldman's target of $3,000 per ounce by Q2 2026. However, ZeroHedge analysis suggests that deep-seated issues in the precious metals market are worsening. With the spread between New York COMEX futures prices and London spot gold prices (Exchange-for-Physical or EFP) widening recently, concerns over US tariffs on gold imports have led to a significant increase in EFP. Initially, transporting gold to the US incurs costs such as refining in Switzerland to meet COMEX delivery standards, affecting arbitrage profits. If the US imposes a 10% tariff on all gold imports, shipping gold to the US will become more expensive, potentially rendering arbitrage transactions unprofitable. As a result of this expectation, traders have begun moving gold to the US, causing shortages in London and driving up gold leasing rates. Currently, the one-month gold leasing rate (a key indicator of physical demand) has reached a historic high, with market traders competing to secure physical gold to take advantage of the EFP spread. This has led to a 64% surge in COMEX exchange inventories (to $37 billion) as traders deliver physical gold to hedge COMEX short positions. If US tariffs take effect, ZeroHedge analysis suggests that the EFP spread between COMEX and London gold prices could temporarily soar to around 10%, before eventually falling to a range of 0-10%, depending on supply and demand in London and the US markets. While Goldman's baseline forecast does not anticipate tariffs on precious metals (although they expect industrial metals to be taxed), tariff risk premiums are expected to persist on the EFP curve. In addition, the silver market is facing a similar situation, with the one-month leasing rate hitting a historic high, leading to an inverted forward curve (despite SOFR rates exceeding 4%). Traders are rushing to buy silver to capitalize on arbitrage opportunities. Ronan Manly of Bullion Brief points out that the market is at a critical juncture: London Precious Metals Clearing Limited (LPMCL) has run out of deliverable gold in its vaults, trying to borrow gold through the Bank of England's gold lending market, but this route is also becoming increasingly difficult. These clearing banks (JPMorgan, HSBC, UBS, and China Standard Bank) need to maintain a certain amount of London gold reserves to ensure liquidity, but it appears they do not currently have enough gold to do so. Counterparty risks among members of the London Bullion Market Association (LBMA), including market makers, clearing institutions, and around 50 trading and brokering firms are rising. Currently, traded in the market are "gold debts" (i.e., electronic gold receipts), which are now being discounted because they cannot be redeemed for physical gold at any time. The lending rate (cost of shorting) for GLD (the world's largest gold ETF) surged from 2.44% to 6.29% in a matter of hours, highlighting market panic. Manly warns: "This means the market is in total panic... the London market has no gold support!" Despite this, Goldman Sachs continues to hold onto their target of $3,000 per ounce by Q2 2026. Goldman believes that increasing US policy uncertainty may continue to drive long-term hedging demand from central banks and investors, thereby bringing upward risk to the $3,000 per ounce gold price target. Despite high current market positions reducing the attractiveness for short-term investors, Goldman still advises holding gold in the long term and continues to recommend long-term gold trading strategies, particularly for investors looking to hedge against US policy risks. This article is reprinted from "Wall Street See" by author Zhao Yuhe, GMTEight Editor: Zhang Jinliang.