China Secretly Buying Up Massive Amounts Of Gold, 10x More Than Officially Reported: Goldman

One month ago, with gold sprinting to daily record highs, Goldman's precious metal analyst Lina Thomas made the case that gold will rise by the end of 2025 to $3,000 as a result of relentless central bank purchases in general, and thanks to China's ravenous appetite for gold in particular. The bank promptly got pushback on this thesis, with skeptics countering that it is unlikely that gold will manage to keep its ascent at the same time as the dollar rises to new record highs, one of the largest consensus Trump trades.

In response, Thomas has also pushed back, and in a note (available to pro subs) writes that she disagrees with the argument that "gold cannot rally to $3,000/toz by end-2025 in a world where the dollar stays stronger for longer", for four reasons:

• First, Goldman economists expect both Fed cuts and a strong dollar in a global monetary easing cycle, but it will be US policy rate that drives investor gold demand, with no significant additional role for the dollar. In the bank's base case, it sees a boost from 100bps of Fed cuts to end-2025 gold price of 7%, but estimate that gold would rise to just $2,890/toz if the Fed cuts only one more time (which looks increasingly likely).
• Second, Thomas disagrees with the view that dollar strength will halt structurally higher central bank purchases (which boosts the end-2025 gold price by 9% in her base case) because central banks tend to buy gold internationally from their dollar reserves. In fact, the large central bank buyers tend to raise their gold demand amid local currency weakness to boost confidence in their currency.
• Third, the tendency for the dollar and gold prices to rise with uncertainty supports their roles as portfolio hedges, including against tariff escalation.
• Finally, the yuan depreciation and broader easing that Goldman economists expect should have a roughly neutral net effect on China's retail gold demand, as the gold demand boost from lower China rates roughly offsets the hit from higher local gold prices.