Goldman Sachs has cut its gold forecast to $4,900: hawkish Fed policy weighs on the market
Analysts have revised their year-end gold target, lowering it by $500 to $4,900 per ounce. The key reason is weakening expectations for a loosening of the Federal Reserve's monetary policy in 2026.
Even with this adjustment, the bank maintains a bullish view on the precious metal in the second half of the year, but it is no longer as optimistic as before. The revision was recorded in an analytical note from leading strategists.
Why the Gold Forecast Was Lowered
The main trigger is a sharp drop in demand for gold-backed exchange-traded funds. In May, investors worldwide withdrew about $2 billion from such ETFs. Capital inflows were observed only in European funds, while Asian structures lost $1.2 billion — the first outflow since August 2025. Against this backdrop, bearish sentiment has intensified among market participants.
Interest in gold ETFs is waning amid a reassessment of the probability of a Fed rate cut. This week, the bank's economists moved their expectations for the first rate cut from December 2026 to March 2027, and also shifted their forecasts for the June and December meetings next year.
"We still have a positive long-term outlook for gold, but we remain cautious in the near term: there is a risk of a decline, although growth cannot be ruled out in the medium term," the strategists note.
The Fed's Hawkish Stance
This week, the Fed kept the key rate in the range of 3.50–3.75%, while the number of supporters of further policy tightening is growing. Nine representatives of the regulator now expect at least one increase in 2026.
If the Fed does raise rates, gold could fall to $4,400 by the end of the year, analysts predict. In this scenario, the metal would lose its appeal as a safe-haven asset against political risks. The bank's vice chairman and former head of the Federal Reserve Bank of Dallas, Rob Kaplan, suggested that a hike could occur as early as September.
However, central banks continue to support the market. In April, they were again net buyers of gold, increasing reserves by a net 19 tons. According to a survey by the World Gold Council, about 45% of central banks plan to increase their reserves over the year.
Cryptalist Analytical Conclusion: The Goldman Sachs forecast downgrade is not a trend reversal, but a correction amid changing monetary expectations. Fundamental support from central banks remains strong, but in the short term, gold will be sensitive to any hint of Fed policy tightening. For crypto investors, this is a signal: if the regulator continues its hawkish course, alternative assets, including bitcoin, could also come under pressure.