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 gold forecast for the end of the year, lowering the target price by $500 to $4,900 per ounce. The main catalyst for this decision is the weakening of market expectations regarding the easing of monetary policy by the Federal Reserve (Fed) in 2026.
Despite the correction, the bank maintains a positive outlook for the precious metal in the second half of the year, but acknowledges that the growth potential will now be less powerful than previously assumed. The key factor undermining the bullish scenario was a sharp reduction in inflows into gold-backed exchange-traded funds (ETFs).
ETFs lose appeal, central banks buy the dip
According to the latest data, investors withdrew about $2 billion from global gold ETFs in May. Notably, Europe was the only region to show inflows. Asian funds, on the other hand, lost $1.2 billion — the first net outflow since August 2025. Against this backdrop, bearish sentiment in the market is intensifying.
The reason for the cooling interest in ETFs is a revision of market expectations for the Fed rate. Goldman Sachs analysts this week have already shifted their forecasts for rate cuts to June and December 2026, as well as March 2027. Previously, the first cut was expected in December 2026.
"We remain positive on the long-term prospects for gold, but in the near term we maintain caution: there is a risk of decline, but in the medium term, growth is not ruled out," analysts note.
Fed's hawkish stance: rate could rise as early as September
At its recent meeting, the Fed kept the key rate in the range of 3.50–3.75%, but the number of supporters of further tightening is growing. Nine members of the regulator now expect at least one increase in 2026. If this happens, Goldman Sachs forecasts gold falling to $4,400 by the end of the year, making the metal less attractive as a hedge against political risks.
Former President of the Federal Reserve Bank of Dallas and Vice Chairman of Goldman Sachs, Rob Kaplan, did not rule out that a rate hike could occur as early as September.
Nevertheless, central banks are providing support to the market. In April, they once again acted as net buyers of gold, increasing 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 reserves over the year.
Expert opinion: The downgrade of Goldman Sachs' forecast is not a trend reversal, but a correction of expectations against the backdrop of the Fed's hawkish rhetoric. However, structural demand from central banks and geopolitical uncertainty continue to form a solid foundation for gold. In the short term, the market will be sensitive to any hint of a Fed policy easing, which could trigger a sharp rebound.