Goldman Sachs has cut its gold forecast to $4,900: blame the hawks at the Fed
The precious metals market has received a signal to cool down: a leading investment bank has revised its year-end gold price target, cutting it by as much as $500 to $4,900 per troy ounce. The reason for this move is a sharp change in market expectations regarding the Fed's monetary policy.
The key factor behind the revision is investors' waning belief in a policy easing by the U.S. regulator in 2026. As a result, we are seeing a noticeable cooling in demand for gold-backed exchange-traded funds. In May alone, about $2 billion was withdrawn from such ETFs worldwide. Notably, the only region showing net inflows was Europe, while Asian funds lost $1.2 billion — the first time since August 2025. This is direct confirmation that the bullish sentiment in the gold market is fading.
Fed's hawkish stance weighs on the metal
This week, the Fed left its key interest rate unchanged in the range of 3.50–3.75%. However, the regulator's rhetoric has become more hawkish: nine FOMC members now expect at least one rate hike by the end of the year. Bank analysts predict that if this scenario materializes, gold could fall to $4,400. In a high-interest-rate environment, the metal's appeal as a safe-haven asset diminishes.
Former Dallas Fed President and current bank Vice Chairman Rob Kaplan does not rule out that a rate hike could occur as early as September. This is a serious bearish signal for the entire commodity sector.
However, central banks continue to provide support to the market. In April, they increased their gold reserves by a net 19 tons. Moreover, a World Gold Council survey shows that about 45% of central banks plan to increase their holdings over the next 12 months. This creates a fundamental floor for prices, but in the short term, dynamics will be determined by the Fed's actions.
My expert opinion: Goldman Sachs' forecast revision is not a panic sell-off but a pragmatic adjustment. The Fed's hawkish pivot can indeed temporarily ground gold, but structural demand from central banks and geopolitical instability have not disappeared. I believe the current correction is an entry opportunity, not a signal for a reversal of the long-term trend.