Goldman Sachs has cut its gold forecast to $4,900: Fed rates weigh on the market
Goldman Sachs analysts have revised their annual gold forecast, lowering it by $500 to $4,900 per ounce. The reason lies in changing market expectations regarding the Fed's monetary policy. Investors no longer believe in an imminent easing, and this changes the rules of the game for the precious metal.
Even with the adjustment, Goldman Sachs maintains a positive outlook for the second half of the year, though not as optimistic as before. The main drag is weakening demand for gold-backed exchange-traded funds (ETFs). According to the World Gold Council, investors withdrew about $2 billion from such funds globally in May. European funds saw a slight inflow, but Asian funds lost $1.2 billion — the first time since August 2025. At the same time, bearish sentiment is intensifying in the market.
The key driver of this dynamic is the reduced probability of a Fed rate cut. This week, Goldman Sachs economists moved their rate forecast to June and December of next year. Previously, they expected cuts in December 2026 and March 2027. Now, in their view, a rate hike as early as September is a very real scenario. If this happens, gold could fall to $4,400 by the end of the year, as the metal loses its appeal as a hedge against political risks.
For now, the Fed has kept the rate in the 3.50–3.75% range, but the number of hawks is growing. Nine Fed officials now expect at least one rate hike in 2026. Meanwhile, central banks are providing support to the market: in April, they bought 19 tons more gold than they sold, and 45% of respondents surveyed by the World Gold Council plan to increase reserves over the year.
Expert comment: The situation in the gold market is a classic example of how macroeconomic expectations outweigh fundamental factors. Yes, central banks continue to buy, but short-term dynamics depend entirely on Fed rates. For crypto investors, this is a signal: if gold loses its "risk-free asset" status under tight policy, then bitcoin, often compared to digital gold, could face similar pressure. Keep an eye on inflation data and Fed rhetoric — this will determine the direction of all safe-haven assets.