Goldman Sachs has cut its gold forecast to $4,900: the Fed's hawkish stance changes the game
Goldman Sachs analysts have revised their annual gold forecast, lowering their year-end price target by $500 to $4,900 per ounce. The reason lies in a sharp shift in market expectations regarding the monetary policy of the Federal Reserve.
A key factor putting pressure on the precious metal was the waning interest in gold-backed exchange-traded funds (ETFs). According to my data, in May, investors withdrew about $2 billion from such instruments globally. Notably, the only region showing net inflows was Europe, while Asian funds recorded outflows of $1.2 billion — the first time since August 2025.
This is directly linked to markets reassessing the likelihood of Fed rate cuts. Goldman Sachs economists this week shifted their forecast for the first reduction in borrowing costs to December 2026 and March 2027, abandoning earlier expectations. As a result, gold, traditionally sensitive to real interest rate dynamics, has lost some of its appeal as a safe-haven asset.
However, I would not rush to conclusions about a complete trend reversal. Central banks continue to act as a key stabilizing factor. In April, net purchases of the metal by monetary authorities amounted to 19 tons, and a World Gold Council survey shows that about 45% of central banks plan to increase reserves over the year.
If the Fed does proceed with a rate hike — and nine FOMC members already see at least one move in 2026, while former Dallas Fed President Rob Kaplan does not rule out such a scenario as early as September — then Goldman Sachs analysts expect gold to fall to $4,400. This would be a serious test for the bullish narrative.
My conclusion: The Goldman Sachs forecast revision is not panic, but a pragmatic reassessment amid a changing macro backdrop. In the short term, gold remains under pressure from the Fed's hawkish rhetoric, but long-term structural demand from central banks and geopolitical uncertainty continue to form a solid foundation for price recovery in the second half of the year. Investors should closely watch the September Fed meeting — it could be a turning point for the entire precious metals market.