Goldman Sachs has cut its gold forecast to $4,900: Fed hawks change the game
The precious metals market has received a strong signal for a correction. A leading investment bank has revised its year-end gold price target, cutting it by $500 to $4,900 per troy ounce. The reason? A sharp shift in expectations regarding the Federal Reserve's monetary policy.
The key catalyst for the revision was the market's waning belief in an imminent easing of Fed policy. Markets are now pricing in much lower chances of rate cuts in 2026, which directly dampens appetite for gold as a safe-haven asset that yields no interest income.
ETF flows reverse: bears take control
The clearest indicator of cooling interest is the flow into gold-backed exchange-traded funds (ETFs). In May, investors withdrew approximately $2 billion from these instruments globally. European funds saw modest inflows, but Asian markets lost $1.2 billion — the worst result since August 2025. Bearish sentiment among ETF holders is intensifying, confirmed by increased activity in the options market targeting declines.
Concurrently, the bank's economists have shifted their forecast for the first Fed rate cut. Expectations are now moved to June and December of next year — previously, they had predicted this step for December 2026 and March 2027.
Fed tightens rhetoric: rates could rise
The regulator itself keeps the rate in the 3.50–3.75% range, but the number of supporters for a hike is growing. Nine FOMC members now allow for at least one increase in 2026. Former Dallas Fed President and Goldman Sachs Vice Chairman Rob Kaplan does not rule out that this could happen as early as September. If this occurs, the bank's analysts see a risk of gold falling to $4,400 by year-end, making the metal less attractive as a hedge against political risks.
Nevertheless, central banks are preventing a market collapse. In April, they were again net buyers, increasing reserves by 19 tons. A World Gold Council survey shows that about 45% of central banks plan to increase their reserves over the next 12 months.
Cryptalist Analysis: The Goldman Sachs forecast correction is not a reversal of the long-term trend, but a pragmatic response to the changed macro environment. The Fed's hawkish stance temporarily strips gold of one of its main drivers — the expectation of low rates. However, structural demand from central banks and geopolitical uncertainty remain strong supports. For gold, the current scenario is not a crash, but a transition into a consolidation mode with the prospect of growth in the second half of the year, albeit more modest than previously assumed.