Goldman Lops $500 Off Gold Target on No Fed Cuts This Year

Gold sheets. Photographer: Damian Lemanski/Bloomberg Photo by Damian Lemanski /Bloomberg

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(Bloomberg) — Goldman Sachs Group Inc. cut its year-end gold forecast by $500 an ounce as the Federal Reserve is no longer seen reducing rates in 2026.

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The revised target of $4,900 an ounce for December implies bullion is still expected to gain ground in the second half, although less than previously expected, analysts Lina Thomas and Daan Struyven said in a note.

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“Our gold price views remain structurally constructive but tactically cautious, with near-term downside risk and medium-term upside risk,” they said.

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The Wall Street titan has been one of the most consistently bullish and high-profile voices on bullion in recent years, and the tweaked target represents a slight shift in tone. Among a string of positive calls, the bank in late 2024 advised investors to “go for gold,” correctly predicting a major rally.

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The precious metal has struggled in recent months as the war in the Middle East initially lifted energy prices, boosting expectations for tighter monetary policy. This week, while the Federal Reserve opted to keep interest rates unchanged, policymakers signaled growing support for hikes this year. At the same time, new Fed Chairman Kevin Warsh vowed to restore price stability.

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The cut to the outlook was driven by a lower forecast for inflows into gold-backed exchange-traded funds after the bank’s economists pushed back expectations for US rate cuts to June and December of next year, the analysts said. Previously, reductions were seen in December 2026 and March 2027.

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In addition, concerns over central bank independence may be limited given the “surprisingly hawkish” first Fed meeting under Warsh’s leadership, they added. Warsh was appointed by President Donald Trump, who elevated him after repeatedly lashing out at his predecessor for not slashing rates enough.

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If the Fed were to hike, “demand for gold as a macro policy hedge could unwind more persistently,” with prices at $4,400 by year-end, the analysts said.

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Some Goldman executives have already flagged that possibility. The Fed may need to raise rates as soon as September if inflation remains elevated, Rob Kaplan, vice chairman at Goldman Sachs and former Dallas Fed president, said in an interview with Bloomberg Television this week.

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Still, some supportive factors for gold remained, including central-bank purchases, the analysts added. Official sector purchases were seen at 50 tons a month this year and 40 tons a month next year, they said.

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Gold last traded below $4,135 an ounce, on track for a third weekly decline. After rallying to a record just below $5,600 an ounce at the end of January, prices capped a third straight monthly loss in May.

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(Updates to add context on prior views in fourth paragraph.)

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