Goldman Sachs has cut its gold forecast to $4,900: hawkish Fed policy is to blame
The precious metals market received a serious signal from one of the leading investment banks. Analysts revised their annual gold forecast, lowering it by $500 to $4,900 per troy ounce. The key factor behind this decision is a sharp change in expectations regarding the monetary policy of the U.S. Federal Reserve System.
Why was the forecast lowered?
The main reason lies in the weakening market belief in interest rate cuts in 2026. High rates make gold, which does not generate interest income, less attractive to investors. This is clearly confirmed by the dynamics of flows into gold ETFs. Estimates show that in May, investors withdrew about $2 billion from such funds worldwide. Notably, the only region showing net inflows was Europe, while Asian funds lost $1.2 billion—the first time since August 2025. At the same time, the market is seeing increased bearish sentiment among major players.
Even after the adjustment, the bank maintains a positive outlook on gold for the second half of the year, but no longer expects as aggressive a rally as previously assumed. Analysts note that in the short term, downside risk remains, but in the medium term, growth is still likely.
Fed's hawkish stance pressures the metal
This week, the Fed kept the key rate in the range of 3.50–3.75%, but the number of supporters for further increases is growing. Already, nine representatives of the regulator are considering at least one increase in 2026.
If the Fed indeed tightens policy, Goldman Sachs forecasts gold falling to $4,400 by the end of the year. In this scenario, the metal loses its appeal as a safe-haven asset against political risks. Moreover, the former head of the Federal Reserve Bank of Dallas and current vice-chairman of the bank suggested that a rate hike could occur as early as September.
The only counterbalance to this pressure remains central banks. In April, they once again acted as net buyers, increasing reserves by 19 tons. According to a survey by the World Gold Council, about 45% of central banks plan to increase reserves over the year.
My expert opinion: The revision of Goldman Sachs' forecast is not a panic move but a pragmatic response to the changed macroeconomic reality. However, structural demand from central banks and geopolitical uncertainty continue to form a strong fundamental floor for gold. A collapse should not be expected, but a period of consolidation and correction near current levels is a likely scenario for the coming months. Investors should prepare for increased volatility.