Goldman Sachs has cut its gold forecast to $4,900: the Fed's hawkish stance weighs on the market
Goldman Sachs analysts have revised their annual gold forecast downward by $500 to $4,900 per ounce. The reason lies in weakening expectations for interest rate cuts by the Federal Reserve (Fed) in 2026. The market is increasingly less confident in loose monetary policy, and this directly impacts the precious metal.
Even with this adjustment, the bank maintains a positive outlook on gold for the second half of the year, though it is no longer as optimistic as before. In their analytical note, experts Lynn Thomas and Daan Struyven emphasize that the key factor behind the revision was a sharp decline in demand for gold-backed exchange-traded funds (ETFs).
Outflows from Gold ETFs and Bearish Sentiment
According to data from the World Gold Council, investors withdrew approximately $2 billion from such funds globally in May. Inflows were recorded only in European funds, while Asian funds, on the contrary, lost $1.2 billion — the first time since August 2025. Concurrently, bearish sentiment has intensified in the market: traders are increasingly hedging against downside risks, as confirmed by options statistics.
Interest in gold ETFs is declining amid a reassessment of the likelihood of Fed policy easing. This week, Goldman Sachs economists shifted their forecast for a rate cut to June and December of next year. Previously, they expected the first cut in December 2026 and a second in March 2027. Now, the regulator's hawkish stance is becoming increasingly evident.
"We remain positive on gold's long-term prospects, but we maintain caution in the near term: there is a risk of decline, though growth cannot be ruled out in the medium term," the analysts note.
Fed's Hawkish Stance and Potential Drop to $4,400
The Fed kept its key interest rate in the range of 3.50–3.75% this week, but the number of supporters for further hikes is growing. Nine representatives of the regulator now expect at least one hike in 2026. If the Fed indeed takes this step, gold could fall to $4,400 by the end of the year, Goldman Sachs forecasts. In such a scenario, the metal would lose its appeal as a safe-haven asset against political risks. Former President of the Federal Reserve Bank of Dallas and Vice Chairman of Goldman Sachs, Rob Kaplan, does not rule out a hike as early as September.
However, central banks continue to support the market. In April, they increased their reserves again: net purchases amounted to 19 tons. According to a survey by the World Gold Council, about 45% of central banks plan to increase reserves over the year.
My analysis: The reduction in Goldman Sachs' forecast is not panic, but a pragmatic adjustment. Gold's growth drivers are shifting: speculative demand through ETFs is giving way to structural demand from central banks. In the short term, Fed pressure will dominate, but the long-term bullish trend, supported by de-dollarization, remains intact. Investors should prepare for increased volatility and look for entry points during pullbacks.