Goldman Sachs revises gold forecast as Fed stays hawkish

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Goldman Sachs revises gold forecast

Highlights

Goldman cut its year-end gold target to $4,900.
The bank no longer expects Fed rate cuts in 2026.
Gold traded near $4,135 after three monthly losses.
Central-bank buying remains a key support for bullion.

Fed outlook weighs on bullion

Goldman Sachs expects gold to reach $4,900 an ounce by December, down from its previous $5,400 target, Bloomberg reports. Analysts Lina Thomas and Daan Struyven said the bank remains constructive on gold over the medium term but more cautious in the short run as higher-rate expectations reduce demand for a non-yielding asset.

The revision followed a sharp change in market expectations after the Federal Reserve kept interest rates unchanged but signaled growing support for hikes this year. New Fed Chair Kevin Warsh also emphasized the central bank’s commitment to restoring price stability, adding pressure on gold prices.

Gold was trading near $4,135 an ounce, putting it on track for a third weekly decline. The metal has erased its year-to-date gains after rallying to a record just below $5,600 an ounce in late January, then falling for three straight months through May.

ETF demand takes a hit

Goldman Sachs said the lower target reflects reduced expectations for inflows into gold-backed exchange-traded funds. The bank’s economists now expect U.S. rate cuts only in June and December of next year, rather than beginning later in 2026.

That shift matters because falling interest rates usually support gold by lowering the opportunity cost of holding an asset that pays no income. If the Fed instead raises rates, Goldman Sachs said gold demand as a macro-policy hedge could weaken more persistently, with prices potentially ending the year around $4,400.

The rate-sensitive pressure has outweighed some supportive developments. Commercial shipping has started returning to the Strait of Hormuz after the U.S. declared an end to its blockade, easing fears of prolonged energy shortages. But inflation concerns have not fully faded, as oil and liquefied natural gas flows through the waterway may take time to normalize.

Central banks keep the bull case alive

Goldman Sachs' downgrade does not mark a full retreat from gold. The bank still expects official-sector purchases to support prices, with central banks projected to buy 50 tons a month this year and 40 tons a month next year.

That demand helps explain why the bank remains structurally positive even as it turns more cautious tactically. Gold’s path now depends heavily on whether Warsh’s Fed delivers only an insurance-style hike or begins a broader tightening cycle.

Earlier, we reported that gold consolidates as emerging markets boost demand as a geopolitical hedge.

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