Goldman Sachs has cut its gold forecast to $4,900: the Fed's hawkish stance weighs on the market
Goldman Sachs analysts have adjusted their year-end gold price target, lowering it by $500 to $4,900 per ounce. The main catalyst for the revision is the weakening of market expectations regarding the easing of monetary policy by the Federal Reserve (Fed) in 2026.
Despite this correction, the investment bank maintains a positive outlook on the precious metal in the second half of the year, although it does not expect as aggressive a rally as previously forecast. In their analytical note, experts noted that the key driver of the revision was a decline in demand for gold-backed exchange-traded funds (ETFs).
Declining Interest in Gold ETFs and Bearish Sentiment
According to the World Gold Council, investors withdrew approximately $2 billion from global gold ETFs in May. Only European funds saw inflows in May, while Asian ETFs lost $1.2 billion — the first such decline since August 2025. Concurrently, bearish sentiment has intensified in the market, with traders increasingly hedging against downside risks in gold prices.
The reason for this sharp cooling of interest is a reassessment of the probability of a Fed rate cut. Previously, Goldman Sachs expected the first reduction in December 2026 and the next in March 2027. However, this week, the bank's economists shifted their rate forecasts to June and December of next year, reflecting the regulator's increasingly hawkish rhetoric.
Fed's Hawkish Stance: Rates Remain High
The Fed kept its key interest rate in the range of 3.50–3.75%, but the number of proponents for further increases is growing. Nine Fed officials now anticipate at least one rate hike in 2026. If this occurs, Goldman Sachs forecasts gold could fall to $4,400 by year-end, making it less attractive as a safe-haven asset.
Former President of the Federal Reserve Bank of Dallas and Vice Chairman of Goldman Sachs, Rob Kaplan, did not rule out a rate hike as early as September in a comment to Bloomberg.
Nevertheless, central banks continue to support the market. In April, they were net buyers of gold again, increasing reserves by 19 tons. According to a World Gold Council survey, about 45% of central banks plan to increase their reserves over the course of the year.
My analysis: The downward revision by Goldman Sachs signals that the macroeconomic backdrop is beginning to dominate geopolitical risks. If the Fed indeed moves toward tightening, gold may lose some of its appeal as a hedge, but demand from central banks will continue to provide a "floor" for the price. Investors should closely monitor the Fed's rhetoric in the coming months — this will be a key factor for the metal's dynamics in the second half of the year.