Gold forecast slashed: Goldman Sachs lowers target to $4,900 amid Fed's hawkish stance
A major investment bank has revised its annual gold forecast, slashing it by $500 to $4,900 per ounce. The reason lies in changing market expectations regarding the monetary policy of the Federal Reserve (Fed). Investors are increasingly less confident in rate cuts in 2026, which is putting direct pressure on the precious metal.
Despite the downgrade, analysts maintain cautious optimism for the second half of the year. However, the previously anticipated aggressive growth rates should not be expected. The key factor behind the revision is the weakening demand for gold-backed exchange-traded funds (ETFs).
Why is gold demand weakening?
May showed a worrying trend: investors withdrew about $2 billion from global gold ETFs. Inflows were only seen in European funds, while Asian funds lost $1.2 billion — the first time since August 2025. This is accompanied by a rise in bearish sentiment among market participants, who are increasingly hedging risks.
The main reason is a reassessment of the probability of a Fed rate cut. The bank's economists have shifted their forecasts for the first rate cut to December 2026 and March 2027, a scenario that previously seemed less likely. The market is acknowledging: the era of cheap money is being postponed.
The Fed's hawkish stance and its consequences
This week, the Fed kept its key rate in the range of 3.50–3.75%, while the number of supporters of further hikes is growing. Nine Fed officials already see at least one hike in 2026. If this happens, gold could fall to $4,400 by the end of the year, experts believe. In this scenario, the metal loses its appeal as a safe-haven asset against political risks.
Interestingly, former Dallas Federal Reserve Bank President and Goldman Sachs Vice Chairman Rob Kaplan did not rule out a rate hike as early as September. This adds to market nervousness.
However, the picture is not entirely clear-cut. Central banks continue to support gold. In April, they increased their reserves again, buying 19 tons more than they sold. According to a World Gold Council survey, about 45% of central banks plan to increase reserves over the year. This creates a solid foundation for prices but does not offset the pressure from US monetary policy.
My view: The current forecast revision is not a trend reversal but a sobering reality check. The gold market is shifting from speculative optimism to fundamental valuation. Until the Fed gives clear signals of easing, the metal will remain under pressure. However, structural demand from central banks will continue to limit the downside potential. The key level to watch is $4,400. A break below that would open the door to a deeper correction.