Goldman Sachs has cut its gold forecast to $4,900: the blame lies with the Fed's hawkish stance
Goldman Sachs analysts have revised their annual gold forecast downward by $500 to $4,900 per ounce. The reason lies in weakening market expectations regarding the easing of monetary policy by the U.S. Federal Reserve (Fed).
Despite this adjustment, the bank still expects the precious metal to rise in the second half of the year, although it acknowledges that the upside will not be as strong as previously anticipated. The data was presented in an analytical note by Goldman Sachs experts Lina Thomas and Daan Struyven.
The key factor behind the revision was a notable decline in demand for gold-backed exchange-traded funds (ETFs). According to data from the World Gold Council, investors withdrew approximately $2 billion from such funds globally in May. Inflows were observed only in European funds, while Asian structures lost $1.2 billion over the same month — the first such decline since August 2025. Concurrently, bearish sentiment among market participants is intensifying.
The main reason for the reduced interest in gold ETFs is the market's reassessment of the likelihood of Fed rate cuts. This week, Goldman Sachs economists shifted their rate forecast, postponing expected cuts from December 2026 and March 2027 to a later date. The bank had previously anticipated two rounds of easing.
Fed's hawkish stance pressures the metal
This week, the Fed kept its 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 this occurs, Goldman Sachs forecasts gold will fall to $4,400 by year-end, as the metal loses its appeal as a hedge against political risks. Rob Kaplan, vice chairman of Goldman Sachs and former head of the Dallas Fed, suggested the possibility of a hike as early as September.
Nevertheless, central banks are providing support to the market. In April, they were net buyers again, increasing reserves by 19 tons on a net basis. Moreover, a survey by the World Gold Council shows that about 45% of central banks plan to increase reserves over the year.
My analysis: The downgrade of Goldman Sachs' forecast is not a trend reversal, but a correction of expectations amid the Fed's hawkish rhetoric. However, institutional demand from central banks remains a powerful fundamental anchor for gold. In the short term, the metal may consolidate in the range of $4,700–$4,900, but the medium-term outlook remains constructive provided the Fed does not move to active tightening. For cryptocurrency investors, this is a signal: if gold loses part of its "safe-haven" premium, alternative assets, including bitcoin, could see additional capital inflows.