Goldman Sachs has cut its gold forecast to $4,900: the Fed's hawkish stance weighs on the market
Analysts have revised their year-end gold price target downward by $500 to $4,900 per troy ounce. The main reason lies in changing expectations regarding the Federal Reserve's monetary policy.
The market is increasingly less confident in monetary policy easing in 2026. This has directly impacted the investment appeal of the precious metal. Even with the adjustment, the forecast remains positive for the second half of the year, but the scale of expected growth now appears more modest.
Why the Forecast Was Revised
The key trigger was a sharp decline in demand for gold-backed exchange-traded funds. Investors are withdrawing capital: in May, net outflows from such ETFs worldwide totaled about $2 billion. European funds showed modest inflows, but Asian funds, on the contrary, lost $1.2 billion. This is the first time since August 2025 that the region has recorded net outflows.
At the same time, bearish sentiment is strengthening in the market. Interest in gold ETFs is falling precisely against the backdrop of revised expectations for the Fed rate. This week, Goldman Sachs economists shifted their forecast for rate cuts to June and December of next year. Previously, it was assumed that the first cut would occur in December 2026 and the second in March 2027.
"We maintain a positive view on gold's long-term prospects, but remain cautious in the near term: there is a risk of a decline. However, in the medium term, growth is not ruled out," analysts note.
Fed's Hawkish Stance
The regulator kept the key rate in the range of 3.50–3.75%, but the number of supporters of further tightening is growing. Nine Fed representatives now expect at least one rate hike in 2026.
If the rate is indeed raised, gold could fall to $4,400 by the end of the year, analysts believe. In this scenario, the metal would lose some of its appeal as a safe-haven asset against political risks. Former Dallas Federal Reserve Bank President Rob Kaplan suggested that a rate hike could occur as early as September.
Meanwhile, central banks are providing support to the market. In April, they again bought more gold than they sold, with net additions totaling 19 tons. According to a survey by the World Gold Council, about 45% of central banks plan to increase their reserves over the course of the year.
My view: The revision of Goldman Sachs' forecast is a signal of a shift in the short-term trend. However, structural demand from central banks remains a strong anchor for prices. In the long term, gold retains its status as a key safe-haven asset, especially amid geopolitical uncertainty. The current correction is not a reason for panic, but rather an opportunity for entry.