Goldman Sachs has cut its gold forecast to $4,900: the Fed's hawkish stance pressures the market
Investment bank Goldman Sachs has officially revised its year-end gold price target, lowering it by $500 to $4,900 per troy ounce. The main reason for this move is a sharp weakening of market expectations regarding the easing of monetary policy by the Federal Reserve (Fed) in 2026. The market is increasingly less confident in rate cuts, which directly impacts the appeal of the precious metal.
Even with this adjustment, the bank's analysts maintain a moderately positive outlook on gold for the second half of the year, but they believe the pace of growth will be significantly more modest than previous estimates. The key factor undermining the bullish scenario has been a sharp cooling of interest in gold-backed exchange-traded funds (ETFs).
Capital Outflows and Bearish Sentiment
According to data from the World Gold Council, investors withdrew approximately $2 billion from global gold ETFs in May. The only region to record inflows was Europe. Asian funds, on the contrary, lost $1.2 billion — the first negative result since August 2025. Against this backdrop, bearish sentiment has noticeably intensified in the market, as confirmed by activity in options.
The weakening demand for ETFs is directly linked to the shift in expectations for the Fed's rate. This week, Goldman Sachs economists already moved their forecasts for a rate cut to June and December of next year. Previously, they had expected the first move in December 2026 and March 2027.
Fed's Hawkish Stance and Risks for Gold
The Fed left its key interest rate in the range of 3.50–3.75% this week, but the number of advocates for further policy tightening is growing. Already, nine members of the regulator are open to at least one rate hike in 2026. If this occurs, Goldman Sachs forecasts gold will fall to $4,400 by the end of the year — the metal will lose some of its appeal as a safe-haven asset against political risks.
Former President of the Federal Reserve Bank of Dallas and Vice Chairman of Goldman Sachs, Rob Kaplan, did not rule out in an interview with Bloomberg that the first hike could take place as early as September.
Nevertheless, central banks continue to provide support to the market. In April, they were again net buyers, increasing reserves by 19 tons. A survey by the World Gold Council also shows that about 45% of central banks plan to increase reserves over the course of the year.
Analyst Comment: The downgrade of Goldman Sachs' forecast is an important signal, but not a death sentence for gold. We see how macroeconomic factors (Fed rates) are temporarily outweighing structural demand from central banks. However, if regulators continue to buy the metal at the same pace and inflation expectations remain high, the current correction could be just a pause before a new rally. Investors should closely monitor the Fed's rhetoric in the coming months — it will determine the trajectory of gold prices in the second half of the year.