Goldman Sachs lowers gold forecast: $4,900 under pressure from hawkish Fed policy
Major revision of precious metals price targets: Goldman Sachs analysts have adjusted their gold price forecast for year-end, lowering it by $500 to $4,900 per ounce. The main reason is a sharp shift in market expectations regarding the monetary policy of the Federal Reserve.
Despite such a significant adjustment, the bank maintains a positive outlook for gold in the second half of the year, although it acknowledges that the growth potential will be considerably more modest than previously assumed. In their analytical note, experts note that the drivers that supported the rally earlier in the year are beginning to weaken.
Why was the forecast revised?
The key factor influencing the decision was a decline in demand for gold-backed exchange-traded funds (ETFs). According to the latest data, investors withdrew approximately $2 billion from such funds globally in May. Notably, the only region showing net inflows was Europe. Asian funds, on the other hand, lost $1.2 billion — the first negative result since August 2025. Against this backdrop, bearish sentiment has noticeably intensified in the market.
The decline in interest in gold ETFs is directly linked to the changing consensus on the Fed rate. Markets are increasingly less convinced of monetary policy easing in 2026. This week, Goldman Sachs economists moved their forecasts for the first rate cut to June and December of next year, whereas they previously expected it in December 2026 and March 2027.
"We remain positive on the long-term prospects for gold, but we maintain caution in the near term: there is downside risk, but medium-term growth cannot be ruled out," the analysts conclude.
The Fed's hawkish stance pressures the metal
This week, the Fed left the key interest rate unchanged in the range of 3.50–3.75%, but the number of supporters of further policy tightening is growing. Already, nine members of the regulator are open to at least one rate hike in 2026.
In a scenario where the Fed does decide to raise rates, Goldman Sachs analysts forecast gold falling to $4,400 by year-end. In this case, the metal would lose its appeal as a safe-haven asset against political risks. Moreover, Goldman Sachs Vice Chairman and former President of the Federal Reserve Bank of Dallas, Rob Kaplan, does not rule out that a hike could occur as early as September.
However, central banks continue to provide support to the market. In April, they once again acted as net buyers, purchasing 19 tonnes of gold on a net basis. According to a survey by the World Gold Council, around 45% of central banks plan to increase their reserves over the course of the year.
My analysis: The downgrade of Goldman Sachs' forecast is not a trend reversal, but a correction of expectations. Gold remains in a strong bullish cycle, underpinned by demand from central banks. However, in the short term, the Fed's hawkish rhetoric will create pressure. The $4,900 level is not a ceiling, but rather an intermediate stop. The key test for gold will be the September Fed meeting. If rates are raised, we may see a temporary pullback, but structural demand from states will remain a powerful fundamental factor.