BlackRock CEO Larry Fink has recently highlighted growing concerns among central banks regarding the potential impacts of a rapidly changing financial landscape, particularly as gold prices have experienced a notable downturn. His remarks come at a time when the precious metal, traditionally seen as a safe-haven asset, has tumbled below the $4,000 per ounce mark.
Fink, speaking at the Future Investment Initiative (FII) conference in Saudi Arabia, pointed to an increasing trend of investors turning to both gold and cryptocurrency amid fears of asset devaluation. He characterized these assets as "assets of fear," reflecting investor anxiety about the stability of their financial holdings.
The decline in gold prices can be attributed to several factors, primarily easing tensions in U.S.-China trade relations. Signs of progress in trade negotiations have reduced investor demand for safe-haven assets like gold, prompting some to take profits. This shift in sentiment has led to a significant outflow from gold-backed Exchange Traded Funds (ETFs), further contributing to the price decrease.
Just last week, gold reached record highs, trading above $4,380 per ounce. However, the recent slump saw spot gold prices dip to as low as $3,963.53 per ounce, the steepest drop in 12 years. Despite this correction, gold prices are still up more than 50% this year, buoyed by strong ETF demand and central bank buying aimed at diversification.
Fink also addressed the broader issues facing the U.S. economy, emphasizing the country's reliance on selling dollars to international investors. He voiced concerns over the U.S.'s need to sell a substantial portion of its Treasury sales overseas, cautioning about the potential risks if this dependency changes. He advocated for unlocking private capital to mitigate these risks.
A key concern for central banks, according to Fink, is the impact of tokenization and digitization on the financial system. Central bankers are grappling with how quickly to digitize currencies and the implications for the U.S. dollar and payment systems. Fink noted that gold's share of central bank reserves reached 24% in the second quarter of 2025, highlighting the increasing importance of these assets in global finance.
Despite the recent volatility, some analysts remain optimistic about gold's future. JPMorgan, for instance, projects gold to reach $5,055 by late 2026. Goldman Sachs maintains a positive outlook, viewing the recent drop as a healthy consolidation and expects prices to recover steadily, forecasting $4,440 per ounce in the first quarter of 2026 and $5,055 per ounce by the final quarter of the year. These projections are based on expectations of lower interest rates, falling bond yields, continued economic uncertainty, and a weaker U.S. dollar.
The U.S. Federal Reserve's upcoming interest rate decision is being closely watched by traders. A rate cut is widely anticipated, which could potentially stabilize gold prices, as lower rates traditionally boost demand for non-yielding assets. BlackRock CEO Larry Fink anticipates that the Federal Reserve will cut the interest rate by at least 25 basis points this year. He also warned of embedded inflation, and doesn't expect interest rates to go as low as some are forecasting.
