Goldman Sachs and central banks witness high demand and purchase of gold, ditching BTC

Goldman Sachs, co-head of global commodities research Daan Struyven, says financial institutions and federal banks are taking up more special metals positions than Bitcoin. Speaking on CNBC’s Squawk Box Monday, Struyven explained that US-based commodity prices are up due to “tariff expectations.”

Spot gold prices have climbed 13.88% to $3,004.81 per troy ounce, according to Trading Economics data. The metal reached an all-time high value of $3,008 last week but had dropped $2,990 as of Monday’s US open market session.

“We have seen very significant increases in investor demand for gold. And we’re also seeing very rapid buying from central banks,” Struyven told CNBC.

Struyven attributed rising gold prices to fears of a US-influenced trade war and inflation concerns. He noted that while commodities typically move together, the market is witnessing a partial divergence, with gold and copper on the uptrend but oil prices are sinking.

Tariffs are driving gold demand, Goldman Sachs research head says

Over the weekend, the US said it would persistently continue striking Yemen’s Houthi rebels until they agree to stop continued attacks on Red Sea shipping. Struyven said the incident prompted central banks to start pouring cash on gold. “The driver here is uncertainty and risks, downside risks to the US and the global economic outlook,” he explained.

He linked gold’s rise to the market’s response to US President Donald Trump’s tariffs.

“We are expecting somewhat higher inflation, not because of a boost to global aggregate demand, but primarily because of tariffs,” Struyven explained, “I think what’s really interesting is that commodities are front and center in tariff policy, and so investors who want to hedge themselves against tariff escalation, I think, could either go for gold.”

When asked about the special metal’s long-term price projections, Struyven cited Goldman Sachs’ year-end forecast for gold at $3,100 per troy ounce, with a potential upside to $3,300. 

“We have seen a rally despite a decline in speculative positioning. So, the positioning is a lot cleaner than before the rally. And the reason is that investors, and ETF holdings, have jumped. They have added 100 tons of demand over the last month,” Struyven continued.

According to the Goldman Sachs researcher, in January, central bank gold purchases were seven times higher than the pre-2022 average, which he believes meant that governments are walking away from US treasury holdings because “they are not safe.”

Struyven discussed the chatter among G7 countries about possibly freezing or even seizing Russian reserves, as the Ukraine-Russian war doesn’t have a defined ending date in sight. 

“If you’re learning that dollar reserves are offering bargaining power in those kinds of international conflicts, it probably reinforces the willingness of emerging market central bank managers to pile up on gold,” he remarked.

Bitcoin struggles against gold

Gold is up 4% in the last month, giving much more returns to investors than Bitcoin, which shed over 15% in the same period, and is now changing hands 23.6% below its all-time high. Last Friday, Bitcoin breached a rising support trendline against gold, a level that had held for more than 12 years.

According to Coingecko, Bitcoin was valued at $83,177 at the time of this publication, a 0.8% decline in the past 24 hours. US-based spot Bitcoin ETFs are also experiencing the same downtrend, with outflows nearing $2 billion, leaving the market year-to-date, according to on-chain data from Glassnode. 

In a March 13 X post, market analyst Northstar shared a chart showing the gold-to-Bitcoin ratio, noting that Bitcoin has failed to outperform gold for the longest period on record—four years. He suggested that gold’s breakout from the trend spells something more than just price movement.

The BITCOIN/GOLD ratio is breaking below the support line that has held it up for 12 years. If we close a week below it it's very bad. If close the month below it, this bull run should be over (and possibly worse). pic.twitter.com/a8JDiWE311

— Northstar (@NorthstarCharts) March 13, 2025

“Historically, when gold breaks out versus stock markets, it initiates a capital rotation event, sending the NASDAQ down 80% or so. Unfortunately, Bitcoin tracks NASDAQ. If we close a week below it, it’s very bad. If we close the month below it, this bull run should be over, ” Northstar cautioned.

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