MW Billionaire Ken Griffin warns on gold's rally as Goldman targets nearly $5,000
By Barbara Kollmeyer
Goldman Sachs says gold ETF inflow rise reflects expectations of Fed rate cuts
Gold's rally hints at trouble under the surface of U.S. markets, says Citadel's Ken Griffin.
As a government shutdown drags on, markets are hard at work, dazzling investors on all fronts - from fresh S&P 500 SPX and Nasdaq COMP highs, to a rally for gold that's about to take it to $4,000 an ounce.
Gold's (GC00) surge has a lot further to go, say Goldman Sachs analysts, who now predict the metal could trade near $5,000 an ounce by the end of next year.
"We raise our December 2026 gold price forecast to $4,900/toz (vs. $4,300 prior) because the inflows driving the 17% rally since Aug. 26 - western ETF inflows and likely central bank buying - are sticky in our pricing framework, effectively lifting the starting point of our price forecast," wrote analysts Lina Thomas and Daan Struyven, in a note to clients late Tuesday.
They expect ETF inflows will see a boost from 100 basis points in Federal Reserve rate cuts by the middle of next year. Also, the level of those ETF holdings are now fully caught up with Goldman's own U.S.-rates implied estimate, suggesting "recent ETF strength is not an overshoot."
Goldman analysts see risks gold could go even higher, theorizing that investors currently holding stocks and bonds could begin to diversify more into the much smaller gold market. Their chart shows just how little is invested in gold ETFs versus stocks and U.S. Treasury:
Against this bullish backdrop, however, some are seeing trouble.
Ken Griffin, the billionaire founder and CEO of hedge fund Citadel, was heard almost simultaneous warning about that very rally.
"We're seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarize, or de-risk their portfolios vis-à-vis U.S. sovereign risk," he told Bloomberg on the sidelines of a Citadel Securities conference in New York on Monday.
"Inflation is substantially above target and substantially above target in all forecasts for next year. And it's part of the reason the dollar's depreciated by about 10% in the first half of this year. It's the single biggest decline in the U.S. dollar in six months, in 50 years," Griffin said.
That has driven investors into gold as well as other dollar substitutes such as bitcoin (BTCUSD), which he finds "unbelievable."
"You now see individual investors around the world go, 'You know what? I now view gold as a safe harbor asset in a way that the dollar used to be viewed.' That's what's really concerning me," he said.
In another worrying development, Griffin noted that foreign investors are buying U.S. stocks, but now hedging returns back to their local currencies instead of the dollar.
He flagged plenty of rationale for that investor wariness, such as the fact neither Republicans nor Democrats are embracing the "fair amount of fiscal reform" needed to get the U.S. on a path to long-term sustainability. That's as the U.S. sits on a high level of debt and President Donald Trump's One Big Beautiful Bill represents "a pro-cyclical tax cut late in the economic cycle," he said.
Griffin also warned that Fed independence was crucial as it makes tough decisions that neither side of the political aisle would want to do.
The markets
U.S. stock futures (ES00) (YM00) (NQ00) are modestly lower, with Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y steady. The dollar DXY is firmer with gold (GC00) headed toward another record at $3,988 an ounce.
Key asset performance Last 5d 1m YTD 1y S&P 500 6740.28 1.19% 3.77% 14.60% 18.33% Nasdaq Composite 22,941.67 1.55% 5.24% 18.80% 27.99% 10-year Treasury 4.153 0.10 6.60 -42.30 13.60 Gold 3986.3 3.19% 8.39% 51.04% 49.75% Oil 61.85 -2.11% -0.98% -13.94% -19.98% Data: MarketWatch. Treasury yields change expressed in basis points
The buzz
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Trilogy Metals (CA:TMQ) $(TMQ)$ is soaring 200% on news the U.S. government will take a 10% stake worth $36.5 million.
NYSE owner Intercontinental Exchange $(ICE)$ is reportedly in talks to invest $2 billion in crypto-based prediction market Polymarket, valuing it at possibly $10 billion.
Investors continue to watch Tesla $(TSLA)$, which could be about to announce a cheaper Model Y.
IBM $(IBM)$ announced a partnership with AI chatbot maker Anthropic.
Advanced Micro Devices $(AMD)$ was upgraded to buy at Jefferies, while Seaport lifted Netflix $(NFLX)$ to a buy. Jefferies downgraded Dollar Tree $(DLTR)$ to underperform.
Fed Gov. Stephen Miran will be speaking twice on Tuesday, including one during market hours at 10:45 a.m. Eastern. The New York Fed's inflation expectations will be released at 11 a.m.
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-Barbara Kollmeyer
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October 07, 2025 06:57 ET (10:57 GMT)
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