Goldman Sachs cut its gold forecast to $4,900: the Fed's hawkish stance puts an end to the rally
The precious metals market has received a tangible signal of a cooldown. Goldman Sachs has revised its year-end gold price target, cutting it by $500 to $4,900 per ounce. The reason is mundane but critical: market participants are increasingly less confident in a Federal Reserve monetary policy easing in 2026.
Even with this adjustment, the bank remains optimistic about the second half of the year, but expectations have become much more restrained. Analysts note that the key driver of the revision was a weakening in demand for gold-backed exchange-traded funds. In May, investors withdrew about $2 billion from such ETFs worldwide.
The only region that saw inflows was Europe. Asia, on the other hand, recorded outflows of $1.2 billion — the first time since August 2025. Concurrently, the market is seeing a rise in bearish sentiment: traders are increasingly hedging against a decline.
The reason is a reassessment of the probability of a Fed rate cut. The bank's economists have already shifted their forecasts for the first cut to June and December of next year, although they previously expected it in December 2026 and March 2027. The Fed itself left the rate in the 3.50–3.75% range this week, and the number of supporters for a hike is growing: nine Fed officials already allow for at least one increase in 2026.
If this scenario materializes, Goldman Sachs sees gold potentially falling to $4,400 by year-end. The metal would then lose some of its appeal as a safe-haven asset against political risks. Former Dallas Fed President and Goldman Sachs Vice Chairman Rob Kaplan suggested that a hike could occur as early as September.
However, support persists from central banks. In April, they continued to build reserves: net purchases totaled 19 tons. According to a World Gold Council survey, about 45% of central banks plan to increase reserves over the year.
My Analysis
We see a classic conflict between the Fed's hawkish rhetoric and structural demand from the public sector. Short-term pressure on gold is obvious, but fundamental factors — de-dollarization and geopolitical uncertainty — have not disappeared. For crypto investors, this is a signal: if gold loses momentum, alternative assets, including bitcoin, may gain additional interest as a hedge against monetary tightness. However, in the coming months, I expect increased volatility across all safe-haven markets.