Goldman Sachs has cut its gold forecast to $4,900: the Fed's hawkish stance weighs on the market
Goldman Sachs analysts have revised their annual gold price forecast downward by $500 to $4,900 per ounce. The key reason is a sharp weakening of market expectations regarding the easing of monetary policy by the Federal Reserve (Fed) in 2026.
Even with this adjustment, the bank maintains a positive outlook for the precious metal in the second half of the year, but the pace of growth, in their estimation, will be significantly more modest than previously assumed. The main blow to the bullish scenario came from cooling interest in gold-backed exchange-traded funds (ETFs).
According to the latest data, in May, investors worldwide withdrew about $2 billion from gold ETFs. Capital inflows were observed only in European funds, while Asian ETFs, on the contrary, lost $1.2 billion — this is the first net outflow since August 2025. Against this backdrop, bearish sentiment has noticeably intensified in the market, confirmed by the growing volume of short positions on gold options.
Why is the market losing faith in gold?
The decline in appetite for gold ETFs is directly linked to a reassessment of market expectations regarding the Fed's rate. This week, Goldman Sachs economists moved their forecasts for the first rate cut to June and December of next year. Previously, they expected easing as early as December 2026 and March 2027. Now, the consensus is shifting towards a longer period of high rates.
"We remain positive on the long-term prospects for gold, but in the near term we maintain caution: there is a risk of a decline, but in the medium term, growth cannot be ruled out," the bank's analysts note. The Fed left the key rate in the range of 3.50–3.75% this week, while the number of supporters of further increases is growing. Nine representatives of the regulator now allow for at least one increase in 2026.
Hawkish scenario and central bank support
If the Fed does decide to tighten, Goldman Sachs forecasts gold will fall to $4,400 by the end of the year. In this case, the metal will lose some of its appeal as a safe-haven asset against political risks. Moreover, the bank's vice chairman and former head of the Federal Reserve Bank of Dallas, Rob Kaplan, suggested that a rate hike could occur as early as September.
Nevertheless, the market is receiving strong support from central banks. In April, they once again acted as net buyers, increasing their reserves by 19 tons on a net basis. According to a survey by the World Gold Council, about 45% of central banks plan to increase their holdings over the next year. This structural demand continues to act as a key factor keeping prices from a deeper decline.
Expert commentary: The situation in the gold market is a classic example of a struggle between monetary policy and structural demand. As long as the Fed maintains a hawkish stance, gold will be under pressure, but central bank purchases form a reliable "floor." For crypto investors, this is a signal: in conditions of uncertainty over rates, alternative assets, including bitcoin, may receive an additional inflow of capital from those seeking a hedge against traditional risks.