Why Gold Could Hit $4,000

Gold surged to $3,354 this week. (DAVID GRAY/AFP via Getty Images)

Gold is having a great run. A growing club of analysts on Wall Street think it can hit $4,000. Right now, there is little reason to doubt them.

Gold prices climbed 0.1% to $3,354 on Wednesday, having risen five of the past six days. The rally is thanks, in part, to what is happening in Washington.

On Tuesday, the Senate narrowly passed President Donald Trump’s signature tax bill, which could add more than $3 trillion to the national debt. The president also said on Tuesday that he wouldn’t extend his July 9 deadline to strike trade deals with dozens of countries.

These dynamics make it more likely large foreign investors, especially central banks, will continue favoring other U.S. dollar-denominated assets like Treasuries—a key factor in gold’s rally.

Foreign central banks historically rely on the U.S. dollar for hard currency reserves but have been spooked lately by Trump administration policy moves. The People’s Bank of China increased its gold reserves for a seventh straight month in May, despite elevated gold prices. Plenty of other central banks, including those of U.S. allies like Poland, have also been buying up gold.

“Gold’s advance to $4,000 per ounce is more of ‘when’ than an ‘if,’” wrote Yardeni, a prominent markets research firm, in a note on Wednesday. Yardani pointed out that a number of Wall Street banks, including Goldman Sachs, Morgan Stanley and Bank of America, now see gold hitting the milestone in coming months or years. Other Wall Street firms have argued for months that gold could reach $4,000.

It is worth noting that while Trump’s saber-rattling and unpredictability are certainly factors in gold’s recent rise, the surge in central bank buying gold began after President Joe Biden froze Russia’s assets after its 2022 invasion of Ukraine. And gold’s rally has actually slowed in recent weeks: Recent prices are about 2.9% below the latest all-time high set in June. Still, the key drivers behind forecasts of gold’s rally continuing, including uncertainty around trade and the U.S. debt, remain.

Meanwhile, the dollar continues to weaken. It shed nearly 2% of its value in June and is down nearly 9% year to date, according to Dow Jones Market Data. Since gold prices are typically denominated in dollars, a falling dollar makes gold less expensive for international buyers, and typically boosts demand for gold.

J.P. Morgan, which joined the $4,000-an-ounce club last month when it hiked its 2026 forecast for gold prices from $3,019 to $4,068, said gold “remains one of the most optimal hedges for the unique combination of stagflation, recession, debasement, and U.S. policy risks facing markets.”

Write to Ian Salisbury at ian.salisbury@barrons.com