Goldman Sachs cuts gold forecast: Fed's hawkish stance changes the game
Analysts have revised their year-end gold target downward by $500 to $4,900 per ounce. The reason is a sharp weakening of market expectations regarding a loosening of the Federal Reserve's monetary policy in 2026.
Even with this adjustment, the bank maintains a positive outlook on the precious metal in the second half of the year, but it is no longer as optimistic as before. The revision was recorded in an analytical note prepared by leading strategists.
Why the Forecast Was Lowered
The key trigger is weakening demand for gold-backed exchange-traded funds. In May, investors worldwide withdrew about $2 billion from such instruments. The only region showing inflows was Europe. Asian funds, on the other hand, lost $1.2 billion — the first net outflow since August 2025. Simultaneously, bearish sentiment has intensified in the market.
Interest in gold ETFs is declining amid a reassessment of the probability of a Fed rate cut. This week, Goldman Sachs economists postponed the expected timing of the first easing: they now forecast it no earlier than December 2026 and March 2027.
"We still have a positive view on gold's long-term prospects, but we remain cautious in the near term: there is a risk of a decline, though growth cannot be ruled out in the medium term," the strategists note.
The Fed's Hawkish Stance
The Federal Reserve left the key interest 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 the Fed does raise rates, gold could fall to $4,400 by the end of the year, analysts forecast. In such a scenario, the metal would lose its appeal as a safe-haven asset. Former Dallas Federal Reserve Bank President Rob Kaplan suggested that a rate hike could come as early as September.
Central banks continue to provide support to the market. In April, they were again net buyers, increasing reserves by 19 tons. According to a survey by the World Gold Council, about 45% of central banks plan to increase reserves over the year.
My analysis: The current dynamics resemble a classic correction after an aggressive rally. Gold remains under pressure from the Fed's hawkish rhetoric, but structural demand from central banks creates a solid foundation. In the short term, the key support level is $4,400; a break below this level would open the door to a deeper correction. However, for long-term investors, current levels could become an attractive entry point.