Goldman Sachs has cut its gold forecast to $4,900: Fed hawks pressure the market
A major investment bank has revised its annual gold forecast downward by $500, setting a new year-end target of $4,900 per ounce. The reason is a sharp weakening of market expectations regarding the easing of the Federal Reserve's monetary policy in 2026.
Even with this adjustment, analysts maintain a positive outlook on the precious metal in the second half of the year, although they acknowledge that the growth dynamics will be less pronounced than previously assumed. The forecast revision was detailed in a recent research note.
The key factor triggering the revision was a notable weakening in demand for gold exchange-traded funds. According to industry sources, investors withdrew about $2 billion from global gold ETFs in May. The only region showing net inflows was Europe, while Asian funds lost $1.2 billion — the first time since August 2025. Against this backdrop, bearish sentiment has intensified in the market.
The decline in interest in gold ETFs is directly linked to the market's reassessment of the Fed rate outlook. This week, the bank's economists shifted their forecasts for a rate cut to June and December of next year. Previously, they had expected cuts in December 2026 and March 2027.
The Fed's hawkish stance and risks for gold
This week, the Fed left the key rate unchanged in the range of 3.50–3.75%, but the number of supporters of further rate hikes is growing. Nine regulatory officials now expect at least one rate hike in 2026.
If the Fed does decide to raise rates, gold could fall to $4,400 by the end of the year, analysts warn. In such a scenario, the metal would lose some of its appeal as a safe-haven asset against political risks. Notably, the former head of the Federal Reserve Bank of Dallas, now vice chairman of Goldman Sachs, has suggested the possibility of a rate hike as early as September.
However, central banks continue to support the market. In April, they increased their gold reserves again, buying 19 tons more than they sold. According to a survey by the World Gold Council, about 45% of central banks plan to increase their holdings over the year.
My comment: The revision of the Goldman Sachs forecast is an important signal, but not a reason for panic. The gold market is currently in a consolidation phase, balancing between the Fed's hawkish rhetoric and structural demand from central banks. For long-term investors, the current correction could be an entry point, especially considering that real rates still remain at relatively low levels and geopolitical tensions have not disappeared.