Goldman Sachs has cut its gold forecast to $4,900: hawkish Fed policy weighs on the metal
The precious metals market received a significant signal from Goldman Sachs analysts: the year-end gold price target was revised down by $500 to $4,900 per ounce. The main reason is a sharp decline in market expectations regarding the easing of the Federal Reserve's monetary policy in 2026.
Even with this adjustment, the bank maintains a positive medium-term outlook for gold, forecasting growth in the second half of the year, but not as aggressive as previously assumed. In an analytical note, experts noted that the key driver of the revision was weakening demand for gold-backed exchange-traded funds.
Why investors are losing interest in gold ETFs
According to data from the World Gold Council, investors withdrew approximately $2 billion from global gold ETFs in May. Notably, the only region showing net inflows was Europe. Asian funds, on the other hand, lost $1.2 billion — the first outflow since August 2025. At the same time, bearish sentiment among market participants is intensifying.
The decline in interest in ETFs is directly linked to a reassessment of the likelihood of a Fed rate cut. This week, Goldman Sachs economists shifted their rate forecast to June and December of next year. Previously, they expected the first cut in December 2026 and the second in March 2027.
"We remain positive on gold's long-term prospects, but we are cautious in the near term: there is a risk of a decline, but growth cannot be ruled out in the medium term," the analysts concluded.
Fed's hawkish stance and risks for gold
This week, the Fed kept the key rate in the range of 3.50–3.75%, but the number of supporters of further tightening is growing. Nine representatives of the regulator now expect at least one increase in 2026.
Goldman Sachs analysts warn: if the Fed does decide to raise rates, gold could fall to $4,400 by the end of the year, making it less attractive as a hedge against political risks. Former President of the Federal Reserve Bank of Dallas and current Vice Chairman of Goldman Sachs, Rob Kaplan, told Bloomberg that a rate hike could occur as early as September.
However, central banks continue to support the market. In April, they were again net buyers, increasing reserves by 19 tons on a net basis. According to a World Gold Council survey, about 45% of central banks plan to increase reserves over the year.
My view as an analyst: The current situation in the gold market is a classic example of a conflict between long-term structural demand (central banks) and short-term macroeconomic pressure (the Fed). As long as the regulator's hawkish rhetoric dominates, gold will remain under pressure, but any hint of a pause or reversal in Fed policy could trigger a sharp rebound. Investors should closely watch the September meeting.