Goldman Sachs lowers gold forecast to $4,900: Fed pressure shifts the outlook
The precious metals market has received a new signal for caution. A leading investment bank has revised its annual gold forecast, cutting it by $500 to $4,900 per ounce. The reason lies in changing expectations regarding the Fed's monetary policy: investors are increasingly less confident about rate cuts in 2026.
Even with this adjustment, analysts maintain a positive outlook for the second half of the year, though they acknowledge that growth will not be as strong as previously assumed. The main factor behind the revision is weakening demand for gold-backed exchange-traded funds. According to the World Gold Council, investors withdrew approximately $2 billion from such funds globally in May. Interestingly, inflows were only observed in European funds, while Asian structures lost $1.2 billion — the first time since August 2025. At the same time, bearish sentiment has intensified in the market, as confirmed by options activity.
Why the Bank Lowered Its Gold Forecast
The decline in interest in gold ETFs is directly linked to a reassessment of the prospects for a Fed rate cut. This week, Goldman Sachs economists shifted their rate forecast to June and December of next year. Previously, they had expected cuts in December 2026 and March 2027.
"We remain positive on the long-term outlook for gold, but we are cautious in the near term: there is downside risk, though medium-term growth cannot be ruled out," analysts note.
The Fed's Hawkish Stance
This week, the Fed kept the key rate in the range of 3.50–3.75%, but the number of supporters of further increases is growing. Nine members of the regulator now expect at least one hike in 2026. If the Fed does raise rates, gold could fall to $4,400 by the end of the year, analysts predict: the metal would then become less attractive as a hedge against political risks. Goldman Sachs Vice Chairman and former Dallas Federal Reserve Bank President Rob Kaplan told Bloomberg that a 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 19 tons. According to a World Gold Council survey, about 45% of central banks plan to increase their reserves over the year.
Expert opinion: The current situation creates a classic conflict of interest between speculative and institutional demand. While retail investors exit gold through ETFs, central banks are building up reserves. In the long term, this forms a powerful foundation for growth, but volatility may increase in the coming months. The key level to watch is $4,400: a break below it would be a serious bearish signal.