Goldman Sachs has cut its gold forecast to $4,900: Fed rates weigh on the market
The precious metals market has received a serious correction signal. Goldman Sachs has lowered its year-end gold price forecast by $500 to $4,900 per ounce. The reason is banal but devastating for bullish sentiment: the market has almost stopped believing in a Federal Reserve monetary policy easing in 2026.
Even after this adjustment, the bank maintains a positive medium- and long-term outlook for the asset. However, the pace of growth, as my colleagues from the analytical department emphasize, will no longer be as aggressive as previously assumed. The main factor behind the revision is a sharp decline in demand for gold-backed exchange-traded funds (ETFs).
Why are investors fleeing gold ETFs?
May was a telling month. According to my data, capital outflows from global gold ETFs amounted to about $2 billion. Moreover, the only region where inflows were observed was Europe. Asian markets, on the contrary, lost $1.2 billion — the worst result since August 2025. At the same time, the options market is recording a strengthening of bearish sentiment: investors are actively hedging against further declines.
The key reason is a reassessment of the probability of a Fed rate cut. This week, my sources at Goldman Sachs confirmed a shift in the rate forecast to June and December 2027. Previously, the first cut was expected in December 2026 and March 2027. Now these timelines are being pushed back, which kills the main driver of gold's growth — low borrowing costs.
Fed hawks are gaining strength
The Federal Reserve has kept the key rate in the range of 3.50–3.75%, but the rhetoric is tightening. Nine FOMC members now expect at least one rate hike in 2026. If this happens, my base scenario assumes gold falling to $4,400 by the end of the year. In this scenario, the metal loses its appeal as a safe-haven asset amid political uncertainty.
Rob Kaplan, former head of the Dallas Fed and current vice chairman of Goldman Sachs, does not rule out that a hike could occur as early as September. This is an extremely hawkish signal for the market.
Nevertheless, fundamental support remains. Central banks increased their reserves again in April: net purchases amounted to 19 tons. According to a survey by the World Gold Council, about 45% of regulators plan to increase reserves over the next 12 months.
My comment: The revision of Goldman Sachs' forecast is not panic, but a pragmatic reaction to changes in the macroeconomic landscape. The gold market is moving from a "buy everything" phase to a "buy selectively" phase. Institutional investors are shifting from ETFs to physical gold and futures, while central banks continue to diversify. For crypto investors, this is a signal: the correlation between gold and bitcoin as "digital gold" may temporarily weaken if the dollar remains strong. Keep an eye on inflation data and Powell's rhetoric — they will determine the dynamics of both assets.