Goldman Sachs cuts gold forecast to $4,900: Fed hawks pressure the market
The precious metals market received a strong signal from one of the largest investment banks. Goldman Sachs has revised its gold price forecast for the end of the year, slashing it by as much as $500 to $4,900 per troy ounce. The main culprit for this revision is a shift in expectations regarding the monetary policy of the Federal Reserve System.
The bank's analysts note that the key reason was a weakening of market faith in an imminent easing of Fed policy. Investors are no longer pricing in aggressive rate cuts for 2026, which directly impacts gold's attractiveness as a safe-haven asset.
Even with this adjustment, Goldman Sachs maintains a positive outlook on the precious metal for the second half of the year, although it acknowledges that the upside potential is now limited. The immediate trigger for the revision was a sharp outflow of capital from gold exchange-traded funds (ETFs). In May, investors withdrew approximately $2 billion from these instruments globally. Notably, Asian funds, which had long been a driver of demand, recorded a net outflow of $1.2 billion — the first since August 2025.
Hawks in the Fed Gain Strength
This week, the Fed left its key interest rate unchanged in the range of 3.50–3.75%, but the regulator's rhetoric has become noticeably more hawkish. The number of committee members supporting further rate hikes is growing: nine Fed officials now advocate for at least one increase this year.
According to analysts' estimates, if the Fed does decide to tighten, gold could fall to $4,400 by the end of the year. In this scenario, the metal loses its appeal as a hedge against political and economic risks. Moreover, former President of the Federal Reserve Bank of Dallas and Vice Chairman of Goldman Sachs, Rob Kaplan, does not rule out that a rate hike could occur as early as September.
Against this backdrop, the only bright spot for the market remains central banks. In April, they continued to increase their gold reserves, buying 19 tons more than they sold. According to a survey by the World Gold Council, about 45% of central banks plan to increase their holdings over the course of the year.
Cryptalist's Comment: The situation is classic — monetary policy tightening traditionally pressures gold, stripping it of one of its main growth drivers. However, central bank purchases form a strong support level. Until we see an actual rate hike, a drop below $4,500 seems unlikely. But if the hawks in the Fed get their way, we are in for a serious correction.