Goldman Sachs has cut its gold forecast: new target at $4,900 amid hawkish Fed policy
Goldman Sachs analysts have revised their annual gold price forecast, lowering it by a solid $500 to $4,900 per troy ounce. The main reason for this move is a sharp weakening of market expectations regarding a reduction in interest rates by the Federal Reserve (Fed) in 2026.
Despite such a significant adjustment, the bank maintains an overall positive outlook for the precious metal in the second half of the year, although it acknowledges that the growth potential is now less impressive than previously assumed. In their analytical note, experts Lynn Thomas and Daan Struyven emphasize that the main trigger for the revision was a noticeable capital outflow from gold-backed exchange-traded funds (ETFs).
Why is the market losing interest in gold?
According to data from the World Gold Council, investors withdrew approximately $2 billion from global gold ETFs in May alone. Notably, only European funds showed net inflows in May, while Asian funds, on the contrary, lost $1.2 billion — the first such outflow since August 2025. Concurrently, the market is recording an increase in bearish sentiment among participants.
The key factor putting pressure on gold remains the Fed's monetary policy. This week, the regulator kept the rate at 3.50–3.75%, but the number of supporters for further increases is growing. Already, nine Fed officials anticipate at least one rate hike this year. Goldman Sachs economists have also adjusted their expectations, shifting the forecast for rate cuts to December 2026 and March 2027.
Scenarios and support levels
The bank's analysts model two main scenarios. If the Fed does decide to raise rates as early as September, as former Dallas Federal Reserve Bank President Rob Kaplan does not rule out, gold could fall to $4,400 by the end of the year. In this case, the metal would lose some of its appeal as a safe-haven asset against political risks.
However, central banks continue to provide support to the market. In April, they were net buyers, increasing reserves by 19 tons on a net basis. Additionally, a World Gold Council survey shows that about 45% of central banks plan to increase their reserves over the course of the year.
My view: The forecast revision from Goldman Sachs is not a panic signal but rather a pragmatic reaction to the changed macroeconomic landscape. In the short term, gold will be sensitive to Fed rhetoric, but structural demand from central banks and geopolitical uncertainty continue to form a solid foundation for prices. The $4,900 level looks like a realistic target, but for a return to more aggressive growth, the market needs a clear signal of a reversal in U.S. monetary policy.