Goldman Sachs cuts gold forecast to $4,900: Fed hawks change the game
The precious metals market has received a serious signal for a correction. My analysis shows that leading financial institutions are revising their gold expectations amid the tightening of the Federal Reserve's monetary policy. Goldman Sachs has lowered its year-end gold target by as much as $500, to $4,900 per troy ounce.
Why is gold losing its luster?
The key factor behind this decision is a sharp decline in market confidence regarding interest rate cuts in 2026. Investors are actively withdrawing capital from gold exchange-traded funds (ETFs). According to the latest data, about $2 billion was pulled from such funds worldwide in May. Notably, Asian funds, which had previously been a growth driver, recorded a net outflow of $1.2 billion for the first time since August 2025. Europe remained the only region to see inflows.
This dynamic is directly linked to changing expectations for the Fed's rate. This week, the bank's economists moved their forecasts for the first rate cut to June and December of next year, whereas they previously expected this step in December 2026 and March 2027. The regulator's hawkish rhetoric creates a strong backdrop for the U.S. dollar, which traditionally pressures gold prices.
Bearish scenario and central bank support
Goldman Sachs analysts do not rule out a more pessimistic development. If the Fed proceeds with a rate hike as early as September, as some regulator representatives suggest, gold could fall to $4,400 by the end of the year. In this scenario, the metal would lose its appeal as a safe-haven asset against political risks.
However, the situation is not so clear-cut. The main supporting factor for the market remains the actions of global central banks. In April, they once again acted as net buyers, increasing their reserves by 19 tons. A survey by the World Gold Council shows that about 45% of central banks plan to increase their holdings over the next year. This creates a solid foundation under the market that could limit the depth of the decline.
My expert opinion: The downgrade in the forecast from Goldman Sachs is not a panic signal, but a pragmatic adjustment. In the short term, pressure on gold will persist due to the strong dollar and the Fed's hawkish policy. However, structural demand from central banks and ongoing geopolitical uncertainty will prevent gold from collapsing. For long-term investors, the current correction could become an entry point, but buying should only occur after the macroeconomic backdrop stabilizes.