Goldman Sachs cuts gold forecast: hawkish Fed stance dashes hopes for $5,400
The precious metals market has received a significant signal for a correction. A leading investment bank has revised its annual gold forecast, lowering the target price by $500 to $4,900 per troy ounce. The main catalyst for this decision is a sharp shift in expectations regarding the monetary policy of the Federal Reserve System.
Analysts note that investors are increasingly losing faith in a rate-cutting cycle in 2026. This fundamentally changes gold's appeal as a safe-haven asset. Even with the lowered forecast, the bank maintains a positive outlook for the second half of the year, but the previous optimism is no longer present. The market for gold-backed ETFs is showing worrying dynamics: in May, about $2 billion was withdrawn from these funds worldwide. Particularly telling was the outflow from Asian funds, which lost $1.2 billion — the first time since August 2025. European funds, on the other hand, saw a small inflow, but this does not offset the overall picture.
Meanwhile, bearish sentiment is intensifying in the derivatives market. Investors are actively hedging risks, expecting further tightening of Fed policy. This week, the bank's economists shifted their rate forecasts: the first cut is now expected no earlier than December 2026, with the next one only in March 2027. Previously, it was assumed that the easing cycle would begin earlier.
The Fed itself kept the key rate in the range of 3.50–3.75% this week, but the number of supporters of further increases is growing. Already, nine representatives of the regulator are considering at least one rate hike this year. If this happens, gold could fall to $4,400 by the end of the year — analysts consider this scenario quite realistic. The former head of the Federal Reserve Bank of Dallas, now the bank's vice chairman, does not rule out a hike as early as September.
However, it is not all clear-cut. Central banks continue to support the market. In April, they once again acted as net buyers, increasing reserves by 19 tons. A survey by the World Gold Council shows that about 45% of central banks plan to increase reserves over the year. This creates a powerful fundamental counterbalance to the pressure from US monetary policy.
My Analysis
The situation is classic: the Fed's hawkish rhetoric temporarily outweighs structural demand from central banks. However, for long-term investors, the current correction is not a reason to panic, but rather an opportunity to enter. Gold remains a key diversification tool, and once the market prices in the new tightening cycle, the potential for growth will open up again. Keep an eye on inflation data — it will be the main trigger in the coming months.