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 downward by $500, setting a new target of $4,900 per ounce. The key factor behind this decision is the weakening market expectations regarding the easing of the Federal Reserve's monetary policy in 2026.
Reasons for the Forecast Revision
The main reason for the adjustment was a sharp shift in sentiment among institutional investors. May saw a net capital outflow from gold exchange-traded funds (ETFs) worldwide, totaling approximately $2 billion. Notably, the only region to see inflows was Europe. Asian funds, on the other hand, lost $1.2 billion — the first negative result since August last year.
This dynamic is directly linked to a reassessment of the likelihood of a Fed rate cut. Markets are increasingly less convinced that the regulator will ease policy in the coming quarters. Goldman Sachs economists have already moved their expectations for the first rate cut from December 2026 to March 2027, putting additional pressure on the precious metal.
Despite short-term pessimism, the bank maintains a bullish view on gold's long-term prospects. Analysts note that some growth is possible in the second half of the year, though not as significant as previously assumed.
Fed's Hawkish Stance and Risks for Gold
This week, the Fed left the key rate unchanged in the range of 3.50–3.75%, but the number of supporters of further tightening is growing. Nine FOMC members now allow for at least one rate hike in 2026. If this scenario materializes, Goldman Sachs forecasts gold prices falling to $4,400 by year-end, making it less attractive as a safe-haven asset against political risks.
Rob Kaplan, Vice Chairman of Goldman Sachs and former head of the Dallas Fed, suggested that a hike could occur as early as September.
However, central banks continue to support the market. In April, they once again acted as net buyers, increasing their reserves by 19 tons on a net basis. According to a World Gold Council survey, about 45% of central banks plan to increase their holdings over the next year.
My analysis: The revision of Goldman Sachs' forecast is a clear signal of a shift in the macroeconomic backdrop. While central banks support physical demand, the flow of "smart money" out of ETFs indicates that institutions are hedging against the risks of Fed tightening. For crypto investors, this is an indirect positive: if gold loses its appeal as a safe-haven asset, alternative instruments, including bitcoin, could see additional capital inflows amid uncertainty. However, for this to happen, the correlation between them must continue to decline.