Goldman Sachs revises gold forecast: Fed's hawkish stance weighs on market
The key driver of gold's growth—expectations of rate cuts—is weakening. A leading investment bank has revised its annual forecast, lowering it by $500 per ounce. Analysts now expect the precious metal to end the year at $4,900, rather than the previously anticipated $5,400.
The main reason for the revision is a shift in market expectations regarding the Federal Reserve's monetary policy. The market is increasingly less confident in policy easing in 2026, which directly impacts gold's appeal as a safe-haven asset. Even with this adjustment, the bank maintains an overall positive outlook for the second half of the year, but without the previous optimism. Analysts note that the upside potential is now limited.
Weakening ETF Demand and Bearish Sentiment
A key indicator of cooling interest is the sharp decline in inflows into gold exchange-traded funds (ETFs). According to the World Gold Council, investors withdrew approximately $2 billion from such funds globally in May. Notably, Asian funds, which were previously a growth driver, recorded a net outflow of $1.2 billion for the first time since August 2025. The only exception was European funds, which saw modest inflows. Concurrently, bearish sentiment is intensifying in the options market, pointing to growing pessimism among major players.
Fed Maintains Hawkish Stance
The Fed's decision to keep the key interest rate in the range of 3.50–3.75% is only part of the picture. More importantly, the number of policymakers favoring further tightening is growing. Nine Fed officials now see at least one rate hike in 2026. The bank's economists have also pushed back their forecasts for potential rate cuts to a later date—from December 2026 to March 2027.
Goldman Sachs analysts warn: if the Fed does decide to raise rates, gold could fall to $4,400 by the end of the year. In such a scenario, the metal would lose some of its appeal as a hedge against political risks. Former Dallas Federal Reserve Bank President and current Goldman Sachs Vice Chairman Rob Kaplan does not rule out that a rate hike could occur as early as September.
Nevertheless, the market is receiving support from central banks. In April, they increased their gold reserves again, buying 19 tons more than they sold. According to a World Gold Council survey, about 45% of central banks plan to increase their holdings over the year. This creates a solid foundation for prices but does not negate short-term pressure from US monetary policy.
Expert opinion: "Goldman Sachs lowering its forecast is not panic, but a pragmatic adjustment. The gold market has entered a consolidation phase where the key factor is not geopolitics, but the Fed's actions. In the short term, pressure will persist, but structural demand from central banks and long-term inflation expectations will prevent gold from falling below $4,400. For investors, the current situation is more of an opportunity to enter on corrections, rather than a signal to flee the asset." — Cryptalist, cryptalist.io