Goldman Sachs has cut its gold forecast to $4,900: Fed hawks cool investor appetite
The precious metals market received a strong signal from one of the world's leading banks. Goldman Sachs has adjusted its year-end gold price target, slashing it by $500 in one go to $4,900 per troy ounce. The reason for this decision was a fundamental reassessment of the monetary policy of the U.S. Federal Reserve System.
Even with this adjustment, the bank's analysts maintain a positive outlook on gold's performance in the second half of the year. However, as emphasized in their updated research note, the expected growth will be significantly more modest than previously assumed. The key factor is the market's waning belief in the possibility of interest rate cuts in 2026.
Why the Fed rate is pressuring gold
The main trigger for the revision is a sharp slowdown in inflows into gold exchange-traded funds (ETFs). According to data from the World Gold Council, investors withdrew approximately $2 billion from these instruments globally in May. The only exception was European funds, which saw a small inflow. Meanwhile, Asian funds lost $1.2 billion, marking their first net outflow since August 2025. Against this backdrop, bearish sentiment among market participants has noticeably intensified.
The decline in interest in gold ETFs is directly linked to the reassessment of expectations for the Fed rate. This week, Goldman Sachs economists shifted their forecasts for potential policy easing. Previously, they expected the first cut in December 2026 and a second in March 2027. Now, these timelines appear even more uncertain amid the growing number of "hawks" within the regulator's leadership.
This week, the Fed kept the key rate in the range of 3.50–3.75%, but the number of supporters for further increases continues to rise. Nine representatives of the regulator now allow for at least one rate hike in 2026. If this scenario materializes, Goldman Sachs forecasts gold falling to $4,400 by the end of the year, making it less attractive as a safe-haven asset against political risks.
Central banks remain a market pillar
Despite the pressure from ETFs, the gold market receives 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 year. This structural factor will continue to support prices in the medium term.
My analysis: The situation in the gold market demonstrates a classic conflict between short-term monetary policy and long-term structural trends. Pressure from Fed hawks and ETF outflows are temporary factors. However, central bank purchases and geopolitical uncertainty create a solid foundation. The market will likely consolidate in the $4,700–$5,000 range until clarity emerges on the Fed's next steps. For long-term investors, the current correction could be an entry point.