In a report released on Monday (May 5), Goldman Sachs stated that strong central bank demand for gold has structurally driven up the gold-silver ratio, and gold will continue to outperform silver.
In other words, Goldman Sachs expects silver to struggle to keep up with the current rally in gold. The gold-silver ratio, which measures the amount of silver needed to buy one ounce of gold, currently stands at around 102. In a year-on-year comparison, this ratio was approximately 84.7 a year ago.
Goldman Sachs explained, "Due to the slowdown in the PV industry amid a supply surplus, coupled with rising recession risks and continued significant gold purchases by central banks worldwide in 2025, we expect gold prices to continue outperforming silver."
On the day, spot gold prices surged by over $70, now trading at $3,315 per ounce, with a year-to-date increase of over 26%. In April, amid geopolitical uncertainties and inflows into gold ETFs, gold prices briefly broke through the $3,500 mark.
The World Gold Council (WGC) wrote in its "Global Gold Demand Trends Report" last week that, driven by a surge in ETF inflows, total global gold demand reached 1,206 mt in Q1 this year, marking the strongest Q1 demand since 2016.
Goldman Sachs added that due to the high correlation between capital flows, if gold demand rises again in 2025, silver prices are also expected to be driven up. As of press time, spot silver prices were trading at $32.40 per ounce, with a year-to-date increase of over 12%.
Goldman Sachs reiterated its "structurally bullish" view on gold in the report, forecasting that under its base case scenario, gold prices will reach $3,700 per ounce by the end of the year and rise to $4,000 by mid-2026.
Goldman Sachs also pointed out that in the event of a recession, accelerated ETF inflows could push gold prices up to $3,880 by the end of the year.
The report further stated that under extreme risk scenarios—such as heightened market concerns over the US Fed's independence or changes in US reserve policies—gold prices could potentially rise to $4,500 by the end of 2025.
Although US President Trump again criticized the US Fed last weekend for not cutting interest rates, he stated that he would not remove Powell from office before the end of his term in 2026.
