Goldman Sachs has cut its gold forecast to $4,900: hawkish Fed policy weighs on the market
Goldman Sachs analysts have revised their annual gold price forecast downward by $500 to $4,900 per troy ounce. The key factor behind this adjustment is the weakening market expectations regarding the easing of monetary policy by the Federal Reserve (Fed) in 2026.
Even with this adjustment, the bank still expects the precious metal to rise in the second half of the year, though not as aggressively as previously assumed. The forecast revision, announced by analysts Lina Thomas and Daan Struyven, reflects a fundamental shift in market sentiment.
Why is gold losing its appeal?
The main reason for the revision was a noticeable weakening in demand for gold-backed exchange-traded funds (ETFs). According to data from the World Gold Council, investors worldwide withdrew approximately $2 billion from these funds in May. European funds saw a slight inflow, but Asian funds, on the contrary, lost $1.2 billion — the first time since August 2025. Against this backdrop, bearish sentiment among market participants has intensified.
The decline in interest in gold ETFs is directly linked to markets reassessing the likelihood of a Fed key rate cut. This week, Goldman Sachs economists shifted their rate forecasts to June and December of next year. Previously, they had expected cuts in December 2026 and March 2027.
"We remain positive on gold's long-term prospects, but we are cautious in the near term: there is downside risk, but medium-term growth cannot be ruled out," the analysts noted.
The Fed's hawkish stance and possible scenarios
This week, the Fed kept the key rate in the range of 3.50–3.75%, but the number of supporters for further tightening is growing. Nine representatives of the regulator now expect at least one rate hike in 2026.
If the Fed does decide to raise rates, gold could fall to $4,400 by the end of the year, analysts forecast. In this scenario, the metal would become less attractive as a safe-haven asset against political risks. Rob Kaplan, Vice Chairman of Goldman Sachs and former head of the Federal Reserve Bank of Dallas, does not rule out a hike as early as September.
It is worth noting that central banks continue to support the market. In April, they were again net buyers of gold, increasing their reserves by 19 tons. According to a World Gold Council survey, about 45% of central banks plan to increase their holdings over the year.
My view: The downward revision of the Goldman Sachs forecast is a signal that the "honeymoon period" for gold amid high inflation and geopolitical uncertainty is ending. The Fed's hawkish rhetoric is the main benchmark for the market, and as long as it dominates, precious metals will remain under pressure. However, structural demand from central banks creates a reliable "floor" that will prevent the price from collapsing catastrophically. Investors should prepare for volatility, but not for a collapse.