Goldman Sachs has cut its gold forecast to $4,900: the Fed's hawkish stance weighs on the market
Major target level revision: Goldman Sachs has lowered its year-end gold price forecast by $500 to $4,900 per ounce. The main reason is a sharp weakening of market expectations regarding a key Fed rate cut in 2026.
Even with this adjustment, the bank maintains a bullish outlook for the second half of the year, although it acknowledges that the rally will not be as strong as previously assumed. Analysts Lin Thomas and Daan Struyven detailed the new scenario in their research note.
Why the revision is inevitable
The key trigger for the forecast downgrade was weakening demand for gold exchange-traded funds (ETFs). According to the World Gold Council, investors withdrew approximately $2 billion from such funds globally in May. European funds saw a small inflow, but Asian funds, on the contrary, lost $1.2 billion — the first net outflow from the region since August 2025. Concurrently, the market is seeing increased bearish sentiment among traders.
The reason for the cooling interest in gold ETFs is clear: the market has stopped believing in an imminent easing of Fed monetary policy. This week, Goldman Sachs economists already moved their expectations for the first rate cut from December 2026 to March 2027, effectively postponing the "dovish" scenario indefinitely.
Fed's hawkish stance and risks for gold
The Federal Reserve left the key rate in the 3.50–3.75% range this week, but the number of supporters for further tightening is growing. Nine regulatory officials now anticipate at least one rate hike in 2026. If this occurs, Goldman Sachs forecasts gold falling to $4,400 by year-end — in that case, the metal would lose some of its appeal as a safe-haven asset.
Former Dallas Federal Reserve Bank President and Goldman Sachs Vice Chairman Rob Kaplan, in an interview with Bloomberg, suggested that a hike could happen as early as September. This creates additional pressure on the precious metals market.
Central banks as market support
Despite the weakening demand from ETFs, the gold market is supported by central bank purchases. In April, they became net buyers again, increasing reserves by 19 tons. According to a World Gold Council survey, about 45% of central banks plan to increase their gold reserves over the next year. This is a long-term fundamental factor that will continue to support prices even under a tight Fed policy.
Expert opinion: The revision of the Goldman Sachs forecast signals that the gold market is entering a consolidation phase. Short-term prospects are indeed clouded by the Fed's hawkish rhetoric, but structural demand from central banks and ongoing geopolitical risks will prevent the metal from entering a deep correction. For investors, this is more of an opportunity to enter at more attractive levels than a reason to panic.