Goldman Sachs has cut its gold forecast to $4,900: the Fed's hawkish stance weighs on the market
The precious metals market received a significant signal from one of the leading investment banks. Goldman Sachs has adjusted its year-end gold price target, lowering the bar by $500 to $4,900 per ounce. The main reason for this revision is a sharp cooling of expectations regarding the easing of the Federal Reserve's monetary policy.
The bank's analysts note that even with this adjustment, they maintain a positive outlook on gold in the second half of the year, but the pace of growth will be significantly more modest than previously assumed. The key factor that changed the picture was the weakening demand for gold-backed exchange-traded funds (ETFs). According to the World Gold Council, investors withdrew approximately $2 billion from such funds globally in May. The only region that saw inflows was Europe. Asian funds, on the other hand, lost $1.2 billion, marking the first outflow since August 2025. Against this backdrop, bearish sentiment among market participants is intensifying.
The decline in interest in gold ETFs is directly linked to a reassessment of the likelihood of a Fed rate cut. This week, Goldman Sachs economists already 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 Fed itself left the key rate in the range of 3.50–3.75% this week, but the number of supporters of further increases is growing — nine representatives of the regulator now allow for at least one increase in 2026.
What will happen to gold if rates rise?
Goldman Sachs analysts modeled a scenario in which the Fed does decide to tighten. In this case, the price of gold could fall to $4,400 by the end of the year, as the metal would lose its appeal as a safe-haven asset against political risks. It is worth noting that former Federal Reserve Bank of Dallas President Rob Kaplan does not rule out a rate hike 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. Moreover, a World Gold Council survey shows that about 45% of central banks plan to increase their reserves over the next year.
Cryptalist's comment: The revision of Goldman Sachs' forecast is an important signal, but not a reason to panic. The current dynamics remind me of the bitcoin market situation after the halving, when short-term volatility gives way to long-term growth amid institutional accumulation. Central bank purchases are "smart money" that rarely makes mistakes in the long run. However, in the coming months, traders should prepare for increased volatility and possible drawdowns to the $4,400–$4,500 levels.