Goldman Sachs has cut its gold forecast to $4,900: Fed rates weigh on the market
A key player in the precious metals market has sharply revised its annual forecast. Goldman Sachs has lowered its gold price target to $4,900 per ounce—$500 below its previous estimate. The main catalyst for this decision is the market's growing skepticism regarding the Federal Reserve's monetary policy easing in 2026.
This does not mean the bank has completely abandoned a positive outlook for the precious metal. Analysts still expect growth in the second half of the year, but it will be significantly more modest than previously assumed. In a research note prepared by experts, it is noted that the main driver of the correction was the waning interest in gold-backed exchange-traded funds.
According to data from the World Gold Council, investors withdrew approximately $2 billion from global gold ETFs in May. Inflows were observed only in European funds, while Asian structures lost $1.2 billion—the first net outflow from the region since August 2025. Against this backdrop, bearish sentiment has intensified in the market, as confirmed by options dynamics.
The key reason for the cooling demand for gold ETFs is the decline in expectations for a Fed rate cut. This week, Goldman Sachs economists moved their forecast for the first rate cut to June and December of next year. Previously, they had expected cuts in December 2026 and March 2027.
"We maintain a positive long-term view on gold, but we are cautious in the near term: there is a risk of decline, although medium-term growth cannot be ruled out," analysts note.
The Fed's Hawkish Stance and Scenarios for Gold
This week, the Fed kept the key rate in the range of 3.50–3.75%, but the number of supporters of further tightening is growing. Nine representatives of the regulator now expect at least one increase in 2026. If the Fed does take this step, gold could fall to $4,400 by the end of the year, experts forecast. In such a scenario, the metal would lose some of 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, did not rule out that a rate hike could occur as early as September.
Nevertheless, the market is receiving support from central banks. In April, they once again acted as net buyers, increasing their reserves by 19 tons on a net basis. A survey by the World Gold Council showed that about 45% of central banks plan to increase reserves over the year.
My analysis: The revision of the Goldman Sachs forecast is a signal that cannot be ignored. The gold market is currently in a zone of uncertainty, where macroeconomic factors (Fed rates) temporarily outweigh structural demand from central banks. However, the long-term trend of de-dollarization and geopolitical instability has not disappeared. For investors, this means that the current correction could become an entry point, but with a clear understanding of the risks of short-term volatility.