Goldman Sachs cuts gold forecast to $4,900: Fed hawks change the game
Major investment bank Goldman Sachs has revised its year-end gold price forecast, cutting it by $500 to $4,900 per ounce. The reason is simple and harsh for bulls: the market has stopped believing in a Federal Reserve policy easing in the foreseeable future.
Even with this adjustment, the bank maintains a positive outlook for the precious metal in the second half of the year, but without its previous optimism. Analysts point out that the key factor behind the revision was weakening demand for gold-backed exchange-traded funds (ETFs). According to the World Gold Council, investors withdrew about $2 billion from such funds globally in May.
Notably, the only region showing net inflows was Europe. Asian funds, on the other hand, recorded outflows of $1.2 billion—the first since August 2025. Against this backdrop, bearish sentiment among market participants has noticeably intensified, as confirmed by options data.
Interest in gold ETFs is waning as markets lower their assessment of the probability of a Fed rate cut. Goldman Sachs economists this week shifted their rate forecast to June and December of next year. Previously, they expected cuts in December 2026 and March 2027.
"We remain positive on gold's long-term prospects, but we are cautious in the near term: there is downside risk, but medium-term growth cannot be ruled out," analysts note.
Fed's hawkish stance pressures the metal
This week, the Fed kept its key rate in the range of 3.50–3.75%, but the number of supporters for further hikes is growing. Nine regulator officials now expect at least one hike in 2026.
If the Fed does raise rates, gold could fall to $4,400 by year-end, analysts forecast. In this scenario, the metal becomes less attractive as a hedge against political risks. Goldman Sachs Vice Chairman and former Dallas Federal Reserve Bank President Rob Kaplan suggested that a hike could come as early as September.
Central banks are providing some support to the market. In April, they again bought more gold than they sold—net additions totaled 19 tons. According to a World Gold Council survey, about 45% of central banks plan to increase reserves over the year.
Cryptalist analyst's opinion: The revision of Goldman Sachs' forecast is a clear signal of a shift in the market narrative. As long as the Fed maintains a hawkish stance, gold will remain under pressure, despite structural support from central banks. Investors should prepare for heightened volatility in the coming months, especially if the September meeting brings a surprise rate hike.