American banking giant Goldman Sachs has cut its gold price forecast for the end of 2026, citing a more hawkish Federal Reserve outlook and lower expectations for interest rate cuts.
The bank now expects gold to reach $4,900 per ounce by December 2026, down from its previous target of $5,400.
The revision reflects Goldman Sachs’ view that the Fed is unlikely to cut rates this year, reducing the outlook for gold demand through exchange-traded funds (ETFs).
The updated forecast comes as gold faces pressure from a stronger U.S. dollar and expectations of tighter monetary policy. Gold closed Friday at around $4,155 per ounce, down nearly 4% year-to-date.
Goldman Sachs lowered its gold price forecast after pushing back expectations for U.S. interest rate cuts, reducing the outlook for inflows into gold-backed ETFs.
The bank now expects rate cuts in June and December 2027, rather than beginning in late 2026. The revision follows a Federal Reserve meeting where policymakers kept rates unchanged but signaled growing support for future hikes.
Higher interest rates generally weigh on gold prices because the metal does not generate income, making yield-bearing assets more attractive to investors.
Gold’s bullish case
Despite lowering its gold price target, the bank continues to maintain a positive long-term outlook for bullion.
The bank said its view remains structurally constructive, supported by continued central bank purchases and ongoing demand for gold as a portfolio hedge.
“Our gold price views remain structurally constructive but tactically cautious, with near-term downside risk and medium-term upside risk,” the analysts said.
At the same time, Goldman Sachs expects official sector gold purchases to average 50 tons per month this year and 40 tons per month in 2027.
However, the analysts warned that additional Fed tightening could create further downside risk.
In a scenario where interest rates rise further and demand for gold as a macroeconomic hedge weakens, the bank sees gold ending the year closer to $4,400 per ounce.
Overall, gold sentiment weakened after the Federal Reserve signaled that interest rates could stay higher for longer. While rates were left unchanged, nine of 19 policymakers projected at least one more hike this year.
The hawkish outlook boosted the U.S. dollar to a one-year high and increased expectations of another rate hike before year-end.
A stronger dollar and higher rates typically weigh on gold by making the non-yielding metal less attractive to investors.
