Goldman Sachs has cut its annual gold forecast to $4,900: the Fed's hawkish stance weighs on the market
Investment bank Goldman Sachs has revised its year-end gold target downward by $500 to $4,900 per troy ounce. The reason for this move lies in a fundamental shift in market expectations: investors are increasingly less confident in a loosening of the U.S. Federal Reserve's monetary policy in 2026.
Even after this adjustment, the bank maintains a bullish view on the precious metal in the second half of the year, but the pace of growth, in their opinion, will be significantly more modest than previously assumed. Analysts Lina Thomas and Daan Struyven emphasized in their research note that a key pressure factor was the outflow of capital from gold-backed exchange-traded funds (ETFs).
According to the World Gold Council, in May, investors withdrew approximately $2 billion from such funds globally. Notably, the only region showing net inflows was Europe, while Asian funds lost $1.2 billion — the first outflow from this region since August 2025. Concurrently, bearish sentiment has intensified in the options market, further weighing on the spot price.
The main catalyst for this trend is a reassessment of expectations regarding the Fed's rate. This week, Goldman Sachs economists shifted their forecasts for a rate cut from December 2026 to March 2027. The Fed itself left the key rate in the range of 3.50–3.75%, but the number of advocates for further policy tightening is growing: nine representatives of the regulator now anticipate at least one increase in 2026.
If the Fed does decide to raise rates, Goldman Sachs analysts predict gold could fall to $4,400 by the end of the year. In this scenario, the metal would lose its appeal as a safe-haven asset against political risks. Former President of the Federal Reserve Bank of Dallas and Vice Chairman of Goldman Sachs, Rob Kaplan, did not rule out in a Bloomberg interview that such an increase could occur as early as September.
Nevertheless, the market is receiving support from central banks. In April, they once again acted as net buyers, increasing reserves by a net 19 tons. According to a World Gold Council survey, about 45% of central banks plan to increase their reserves over the next year.
My comment: Goldman Sachs lowering its forecast is a signal that cannot be ignored. If the Fed's hawkish scenario materializes, gold could enter a correction phase, and $4,400 would become a real support level. However, structural demand from central banks remains a powerful driver that will prevent the metal from going into a deep dive. For crypto investors, this is also an important indicator: tightening monetary policy traditionally reduces appetite for risk assets, including bitcoin.