Goldman Sachs has cut its gold forecast to $4,900: Fed hawks change the game.
The precious metals market has received a strong correction signal. Leading investment bank Goldman Sachs has revised its annual gold price forecast downward — by $500 per ounce, to $4,900. The main catalyst for this decision is a sharp shift in market expectations regarding the monetary policy of the U.S. Federal Reserve System.
Fed's hawkish pivot pressures the "yellow metal"
The key reason for the revision was the weakening of investor confidence in the Fed's policy easing in 2026. Bank analysts note that markets have stopped pricing in rate cuts, fundamentally changing gold's appeal as a safe-haven asset. This week, the Fed left the rate unchanged in the range of 3.50–3.75%, but the number of committee members supporting further tightening is growing. Nine FOMC members now expect at least one rate hike by the end of the year.
Alongside this, Goldman Sachs shifted its own forecast for the timing of the first rate cut — now expected no earlier than December 2026, with the next cut only in March 2027. Previously, the bank had predicted earlier timelines.
ETF flows reverse course
An additional pressure factor is a noticeable outflow from gold-backed exchange-traded funds. According to the World Gold Council, investors withdrew about $2 billion from such funds globally in May. The situation in Asia was particularly telling: Asian funds lost $1.2 billion — the first net outflow since August 2025. Europe remained the only region to show inflows.
Sentiment in the options market has also turned more bearish, with investors actively hedging against further declines in gold prices.
Central banks remain a support pillar
Despite pressure from speculative capital, fundamental support for gold still comes from central banks. In April, they continued to increase reserves, buying 19 tons more than they sold on a net basis. A World Gold Council survey shows that about 45% of central banks plan to increase their gold reserves over the year.
Goldman Sachs analysts maintain a positive outlook on gold's long-term prospects but acknowledge increased risks in the short term. In a scenario where the Fed does raise rates as early as September, gold prices could fall to $4,400 by year-end, making the metal less attractive as a hedge against political risks.
Expert opinion: The gold market is currently in a turbulent zone where macroeconomic factors dominate geopolitical ones. As long as Fed hawks maintain control, gold will face pressure, and $4,900 is more of an optimistic scenario. Investors should prepare for heightened volatility in the second half of the year and closely monitor U.S. inflation and employment data, which will serve as triggers for the next move.