Goldman Sachs cut its gold forecast to $4,900: blame the hawks at the Fed
Wall Street's largest investment bank has revised its expectations for the precious metal, sending a serious signal to the entire market. Goldman Sachs has lowered its year-end gold price target by $500 to $4,900 per troy ounce. The main culprit behind this decision is the changing outlook for the Federal Reserve's monetary policy.
The market is increasingly less confident in monetary policy easing in 2026. Goldman Sachs economists have already shifted their forecasts for Fed rate cuts to June and December of next year. Previously, they expected the first move to follow in December 2026 and the second in March 2027. Now these timelines are being pushed back, which is putting direct pressure on gold.
The key reason for the revision is weakening demand for gold-backed exchange-traded funds (ETFs). Global outflows from such instruments in May amounted to approximately $2 billion — investors are clearly losing their appetite for the metal under current macroeconomic conditions. Notably, Asian funds recorded a net outflow of $1.2 billion, the first such instance since August 2025. The only bright spot was European ETFs, which showed a slight inflow.
This week, the Fed kept its key interest rate in the range of 3.50–3.75%, but the regulator's rhetoric has become noticeably more hawkish. Nine Fed officials now expect at least one rate hike this year. If this happens, Goldman Sachs analysts forecast gold will fall to $4,400 by year-end — in such a scenario, the metal would lose some of its appeal as a safe-haven asset.
My take on the situation: Despite the lowered forecast, the fundamental drivers for gold have not disappeared. Central banks continue to actively increase reserves — in April, they purchased 19 tons of the metal on a net basis, and 45% of regulators surveyed by the World Gold Council plan to increase holdings over the year. This is a powerful counterbalance to pressure from monetary policy. However, in the short term, the market will remain under pressure from the Fed's hawkish signals, and $4,900 is not a ceiling but rather a realistic resistance line under current conditions.