Goldman Sachs has cut its gold forecast to $4,900: hawkish Fed policy weighs on the market
Goldman Sachs analysts have revised their annual gold forecast, lowering their year-end price target 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.
Even after this adjustment, the bank maintains a positive outlook for the precious metal in the second half of the year, but no longer expects as aggressive a rally as previously assumed. The revision was announced in an analytical note prepared by leading Goldman Sachs strategists.
The key factor undermining the bullish scenario was a sharp reduction in inflows into gold exchange-traded funds (ETFs). According to data from the World Gold Council, investors worldwide withdrew about $2 billion from such funds in May. The only region showing net inflows was Europe. Asian funds, on the other hand, lost $1.2 billion — the first time since August 2025. Against this backdrop, bearish sentiment has intensified in the market, as confirmed by options activity.
The decline in interest in gold ETFs is directly linked to a reassessment of market expectations for the Fed's interest rate. This week, Goldman Sachs economists shifted their forecast for the first rate cut to June and December of next year, whereas previously a cut was expected in December 2026 and March 2027. This means the market is pricing in a longer period of high borrowing costs, which reduces the appeal of gold as a non-yielding asset.
Fed's hawkish stance and risks for gold
This week, the Fed kept its key interest rate in the range of 3.50–3.75%, but the number of supporters of further policy tightening is growing. Nine representatives of the regulator now allow for at least one rate hike in 2026. If this scenario materializes, Goldman Sachs forecasts gold prices falling to $4,400 by the end of the year, making it a less effective tool for hedging political risks.
Notably, the former head of the Federal Reserve Bank of Dallas, now vice chairman of Goldman Sachs, allowed for the possibility of a rate hike as early as September.
Nevertheless, the market is receiving support from central banks. In April, they once again acted as net buyers of gold, increasing reserves by 19 tons on a net basis. A survey by the World Gold Council shows that about 45% of central banks plan to increase their reserves over the course of the year.
My view as an analyst: The revision of the Goldman Sachs forecast is not a trend reversal, but a pragmatic adaptation to the new macroeconomic reality. The purchasing power of central banks remains a strong fundamental anchor for gold, but in the short term, the Fed's hawkish rhetoric will curb speculative investor appetites. I expect increased volatility in the range of $4,800–$5,100 until the rate trajectory becomes clearer.