Goldman Sachs lowered its year-end gold price forecast by $500 at once — to $4,900 per ounce. The reason is that the market increasingly doubts rate cuts in 2026.

Even adjusting for this, the bank still expects gold to rise in the second half of the year — but no longer as strongly as it had previously expected. Goldman Sachs analysts Lina Thomas and Daan Struyven reported the revision in a research note.

Want more exclusive news and analytics? Subscribe to our Telegram channel, discuss the news and share your thoughts on the latest market events in the chat!

Why the bank cut its gold forecast

The main reason for the revision is weakening demand for gold-backed exchange-traded funds. According to the World Gold Council, in May investors withdrew about $2 billion from such funds worldwide.

Only European funds saw new inflows in May. Asian funds lost $1.2 billion over the same month — the first time since August 2025. At the same time, bearish sentiment among investors intensified.

Interest in gold ETFs is weakening because markets have begun to assign lower odds to a Fed rate cut. Against this backdrop, Goldman Sachs economists shifted their Fed rate forecast to June and December of next year. Previously, they expected a cut in December 2026 and March 2027.

"We still take a positive view of gold's long-term prospects, but in the near term we remain cautious: there is a risk of a decline, yet in the medium term a rise is not ruled out," Goldman Sachs analysts believe.

The Fed's hawkish stance

This week the Fed kept its key rate in the range of 3.50–3.75%, but supporters of a further hike are becoming more numerous. Nine officials of the regulator now expect at least one hike in 2026.

If the Fed does raise the rate, gold could fall to $4,400 by the end of the year, Goldman Sachs analysts predict: in that case the metal would become less attractive as a hedge against political risks. Goldman Sachs Vice Chairman and former head of the Federal Reserve Bank of Dallas Rob Kaplan told Bloomberg that a hike is possible as early as September.

Source: BeInCrypto