Goldman Sachs has cut its gold forecast to $4,900: The Fed breaks the bullish scenario
Leading investment bank Goldman Sachs has revised its year-end gold target downward by $500 to $4,900 per troy ounce. The reason for this significant correction lies in changing market expectations regarding the monetary policy of the U.S. Federal Reserve. Investors are increasingly less confident in rate cuts in 2026, which directly pressures the value of the precious metal.
Why did the bank lower its forecast?
The key factor in the revision was the weakening demand for gold-backed exchange-traded funds (ETFs). According to the latest data, in May, investors withdrew approximately $2 billion from such funds worldwide. 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. Concurrently, the market is seeing a strengthening of bearish sentiment among major players.
The decline in interest in gold ETFs is directly linked to a reassessment of the probability of a Fed rate cut. Previously, Goldman Sachs expected the first easing in December 2026 and the next in March 2027. However, the bank's economists have now pushed these expectations further out. The market has simply stopped pricing a "dovish" scenario from the regulator into the price of gold.
Fed's hawkish stance and risks for gold
This week, the Fed kept its key rate in the range of 3.50–3.75%, but its rhetoric has become noticeably more hawkish. Nine FOMC members now see at least one rate hike this year. If the regulator does take this step, Goldman Sachs forecasts gold falling to $4,400 by year-end. In this scenario, the metal would lose its appeal as a safe-haven asset amid political risks.
Former Dallas Fed President and Goldman Sachs Vice Chairman Rob Kaplan told Bloomberg that a hike could occur as early as September. This creates a powerful backdrop for pressure on the yellow metal.
Nevertheless, central banks continue to support the market. In April, they were again net buyers, increasing their reserves by 19 tons. According to a World Gold Council survey, about 45% of central banks plan to increase their reserves over the year. This factor remains a key bullish counterargument.
My analysis: Goldman Sachs' lowered forecast is a signal that the "gold rush" in the stock market has been temporarily paused. However, structural demand from monetary authorities and geopolitical uncertainty have not disappeared. I believe the current correction is an opportunity for long-term entry. If the Fed does not raise rates, gold could quickly return to levels above $5,000 as early as the first quarter of 2027.