Goldman Sachs cuts gold forecast to $4,900: hawkish Fed policy weighs on market
Goldman Sachs analysts have revised their year-end gold price target downward by $500 to $4,900 per ounce. The key reason is a sharp cooling of market expectations regarding the easing of the Federal Reserve's monetary policy in 2026.
Even with this adjustment, the bank maintains a positive outlook on the precious metal in the second half of the year, though it is no longer as optimistic as before. The main reason for the revision is weakening demand for gold-backed 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 slight inflow, but Asian ETFs lost $1.2 billion over the same month — the first time since August 2025. At the same time, bearish sentiment is intensifying in the market, with traders increasingly hedging against downside risks.
Interest in gold ETFs is declining amid a reassessment of the likelihood of a Fed rate cut. This week, Goldman Sachs economists shifted their rate forecast to June and December of next year. Previously, they had expected cuts in December 2026 and March 2027.
At this week's meeting, the Fed kept the key rate in the range of 3.50–3.75%, but the number of supporters of further tightening is growing. Nine Fed officials now expect at least one rate hike in 2026.
If the Fed does raise rates, gold could fall to $4,400 by the end of the year, Goldman Sachs predicts. In this scenario, the metal would lose its appeal as a hedge against political risks. Robert Kaplan, vice chairman of Goldman Sachs and former head of the Federal Reserve Bank of Dallas, does not rule out a hike as early as September.
However, central banks continue to support the market. In April, they were net buyers again, increasing reserves by 19 tons. According to a World Gold Council survey, about 45% of central banks plan to increase reserves over the course of the year.
Cryptalist Analysis
Goldman Sachs' downward revision is not a trend reversal but a correction amid changing monetary conditions. Gold remains in a long-term bullish channel, but volatility will be high in the coming months. Investors should closely monitor Fed rhetoric: any mention of a pause or reversal in the tightening cycle will be a powerful catalyst for a new rally.