Goldman Sachs has cut its gold forecast to $4,900: hawkish Fed policy weighs on the market
The precious metals market has received a strong signal for a correction. A leading investment bank has revised its year-end gold price target, lowering it by $500 to $4,900 per troy ounce. The reason for this move lies not so much in fundamental shifts, but rather in changing expectations regarding the monetary policy of the U.S. Federal Reserve System.
Weakening Demand and Bearish Sentiment
The key catalyst for the revision was a noticeable capital outflow from gold-backed exchange-traded funds (ETFs). In May, investors withdrew approximately $2 billion from these instruments worldwide. European funds saw modest inflows, but this was not enough to offset the losses. Asian ETFs, on the other hand, recorded an outflow of $1.2 billion, the first such instance since August last year. Bearish sentiment is clearly intensifying in the market: traders are increasingly hedging against downside risks.
The reason for the cooling interest in gold ETFs is obvious: markets have sharply reassessed the probability of a Fed rate cut. The bank's analysts shifted their forecasts for the first policy easing from December 2026 to March 2027, and then completely excluded it from the baseline scenario for 2026. This fundamentally changes the picture for gold, which is traditionally sensitive to real interest rates.
Hawkish Fed Stance: Rates Remain High
This week, the Fed kept the key rate in the range of 3.50–3.75%, but the regulator's rhetoric has become even more hawkish. The number of supporters of further tightening among FOMC members is growing: nine representatives now allow for at least one rate hike in 2026. The former head of the Federal Reserve Bank of Dallas, now vice chairman of Goldman Sachs, directly stated that a rate hike could occur as early as September.
If this scenario materializes, gold could come under even greater pressure. In the event of a rate hike, analysts estimate that the precious metal risks falling to $4,400 by the end of the year, losing its appeal as a hedge against political risks.
Central Banks as a Counterbalance
However, the situation is not so clear-cut. Central banks continue to act as the main stabilizing factor for the gold market. In April, they once again emerged as net buyers, increasing their reserves by 19 tons. Results from a World Gold Council survey show that about 45% of central banks plan to increase their holdings over the next year. This structural demand creates a solid foundation for the market, preventing it from collapsing.
Expert Opinion: Goldman Sachs' downward revision is not a panicked flight from gold, but a pragmatic adjustment in the face of a new monetary reality. The short-term outlook is indeed deteriorating due to the hawkish Fed, but the long-term bullish trend, supported by central bank purchases and geopolitical uncertainty, remains intact. Investors should prepare for increased volatility in the coming months, but writing off gold as "dead" would be a serious mistake.