Goldman Sachs cuts gold forecast: $4,900 is the new target amid the Fed's hawkish stance
The precious metals market received a strong signal from one of Wall Street's leading investment banks. The year-end gold forecast was revised downward by $500 to $4,900 per troy ounce. The main catalyst for this decision is the weakening expectations regarding the easing of monetary policy by the U.S. Federal Reserve.
Even with this adjustment, analysts maintain a positive outlook on gold for the second half of the year, but they no longer forecast as aggressive a rally as previously assumed. The revision is based on a fundamental shift in market sentiment: investors are increasingly less confident in rate cuts in 2026.
Why the Bank Changed Its Assessment
The key reason for the revision was a sharp decline in demand for gold-backed exchange-traded funds (ETFs). In May, about $2 billion was withdrawn from such funds worldwide. European funds saw a slight inflow, but Asian funds, on the contrary, lost $1.2 billion—the first outflow from this region since August 2025. Concurrently, the market is seeing a strengthening of bearish sentiment among institutional investors.
The drop in interest in gold ETFs is directly linked to a reassessment of the probability of a Fed rate cut. This week, the bank's economists adjusted their own rate forecast, shifting the expected first cut from December 2026 to March 2027.
The Fed's Hawkish Stance Pressures the Metal
The Federal Reserve kept its key rate in the 3.50–3.75% range this week, but the number of supporters of further tightening is growing. Nine FOMC members now allow for at least one rate hike this year. If this happens, Goldman Sachs forecasts gold will fall to $4,400 by year-end—in this scenario, the metal would lose some of its appeal as a safe-haven asset against political risks.
Interestingly, the former head of the Federal Reserve Bank of Dallas, now vice chairman of Goldman Sachs, allows for a rate hike as early as September. This adds additional weight to the bearish scenario.
However, it's not all clear-cut. Central banks continue to support the market. In April, they were again net buyers of gold, increasing their reserves by 19 tons on a net basis. Moreover, a World Gold Council survey shows that about 45% of central banks plan to increase reserves over the year.
My view as an analyst: We are witnessing a classic conflict between long-term structural demand from central banks and short-term pressure from monetary policy. As long as the Fed maintains a hawkish stance, gold will remain under pressure, but any hint of a pause or cycle reversal could trigger a sharp rebound. The $4,900 level is not the bottom, but rather a realistic estimate under the current macroeconomic backdrop.