Goldman Sachs has cut its gold forecast: the Fed's hawkish stance weighs on the market
Goldman Sachs analysts have revised their annual gold forecast, lowering it by $500 to $4,900 per ounce. The reason lies in changing market expectations regarding the monetary policy of the Federal Reserve. Participants are increasingly less confident in rate cuts in 2026, which directly affects the appeal of the precious metal.
Even with this adjustment, the bank maintains a positive outlook on gold for the second half of the year, although it acknowledges that the growth potential will be more modest than previously assumed. The corresponding analytical note was prepared by the bank's experts.
Why the forecast was revised
The key factor was the weakening demand for gold-backed exchange-traded funds. In May, investors worldwide withdrew about $2 billion from such ETFs. Inflows were only seen in European funds, while Asian structures, on the contrary, lost $1.2 billion — for the first time since August 2025. At the same time, bearish sentiment intensified in the market.
The decline in interest in gold ETFs is directly linked to the reassessment of the likelihood of Fed policy easing. This week, Goldman Sachs economists moved their expected timing for a rate cut to June and December of next year. Previously, they had forecast this step for December 2026 and March 2027.
"We still have a positive view on gold's long-term prospects, but we remain cautious in the near term: there is a risk of a decline, although growth is not ruled out in the medium term," the analysts noted.
Fed's hawkish stance
This week, the Fed kept the key rate in the range of 3.50–3.75%, while the number of supporters of further increases is growing. Already, nine representatives of the regulator expect at least one increase in 2026. If this happens, gold could fall to $4,400 by the end of the year, Goldman Sachs believes. In such a scenario, the metal would lose some of its appeal as a safe-haven asset against political risks.
Former President of the Federal Reserve Bank of Dallas and current Vice Chairman of Goldman Sachs, Rob Kaplan, suggested that a rate hike could come as early as September.
Meanwhile, central banks are providing support to the market. In April, they again bought more gold than they sold — a net increase of 19 tons. According to a survey by the World Gold Council, about 45% of central banks plan to increase their reserves over the year.
My comment: Against the backdrop of the Fed's hawkish rhetoric, gold is temporarily losing some of its luster for speculative investors. However, structural demand from central banks remains a powerful fundamental factor. If the regulator does not decide to raise rates, we could see a retest of levels above $5,000 by the end of autumn.