Goldman Sachs has cut its year-end gold forecast by $500 an ounce to $4,900, citing the Federal Reserve’s decision to hold rates steady and growing expectations that no cuts will come in 2026.
Analysts Lina Thomas and Daan Struyven said in a note:
“Our gold price views remain structurally constructive but tactically cautious, with near-term downside risk and medium-term upside risk.”
Why the target was lowered
The revision was driven by reduced expectations for inflows into gold-backed ETFs after Goldman’s economists pushed back their forecast for U.S. rate cuts to June and December of next year.
Previously, reductions had been expected in December 2026 and March 2027.
Gold has struggled in recent months as Middle East tensions initially lifted energy prices, boosting expectations for tighter monetary policy.
New Fed Chairman Kevin Warsh vowed to restore price stability, and policymakers signaled growing support for hikes this year.
Goldman’s hawkish warning
The analysts noted that concerns over central bank independence may be limited given what they called the “surprisingly hawkish” first Fed meeting under Warsh’s leadership.
If the Fed were to hike rates, they warned:
“Demand for gold as a macro policy hedge could unwind more persistently, with prices falling to $4,400 by year-end.
Rob Kaplan, vice chairman at Goldman Sachs and former Dallas Fed president, echoed that concern in a Bloomberg Television interview, saying the Fed may need to raise rates as soon as September if inflation remains elevated.
A shift in tone for gold’s biggest bull
Goldman has been one of the most consistently bullish voices on bullion in recent years, advising investors in late 2024 to “go for gold” ahead of a major rally.
The revised target still implies gains in the second half of the year, but the adjustment marks a notable shift in tone as the macro backdrop grows more uncertain.
