Goldman Sachs Slashes End-of-Year Gold Target by $500 Due to Hawkish Fed Stance

Goldman Sachs has revised its end-of-year target for the gold price, dropping its 2026 gold forecast from $5,400 to $4,900. Analysts at the bank lowered their expectation for gold amid fresh signals that the US Federal Reserve will not cut interest rates in 2026.

Fed hawkish stance forces Goldman Sachs to cut bullish gold predictions

Under the new forecast, Goldman Sachs predicts that gold will trade at $4,900 an ounce by the end of the year, a $500 reduction from the previous outlook. Early in the year, the banking giant tipped gold to close 2026 at $5,400, driven by a slew of positive macroeconomic factors and rising institutional and retail interest. 

Despite the revised estimates, Goldman Sachs’ analysts noted gold prices will still surge in the second half of the year. 

Currently, gold is trading at $4,184 an ounce, with the bank predicting a 17% increase for the asset by the end of 2026, making it an attractive short-term bet for investors:

According to Goldman Sachs, the tweaked price projections come amid falling odds for a Federal Reserve rate cut in 2026, hurting cryptocurrency prices and other asset classes.

 While the Federal Open Market Committee opted against a rate cut in its last meeting, the Fed’s updated economic outlook reflected heightened inflation concerns, dousing any optimism for a near-term rate cut.

Source: CME FedWatch 

Historically, gold struggles when the Federal Reserve turns hawkish because higher interest rates increase the appeal of yield-bearing assets like bonds. Since gold pays no yield, the opportunity cost of holding the asset rises when interest rates climb higher.

In a bear case scenario, Goldman Sachs’ analysts theorized that a hike in interest rates could see the precious metal trade at $4,400 by the end of the year. Meanwhile, gold is heading for its third consecutive weekly loss, with the asset trading below its 200-day moving average since the start of June.

A ray of light for gold

Despite the Fed’s hawkish stance dampening price outlook, Goldman Sachs disclosed that there is still a silver lining in the dark cloud for gold. Analysts pointed to sustained central bank demand for the precious metal as factors capable of propping up short-term price performance.

However, current central bank demand is lower than its peak of 67 tonnes per month but still higher than the 17 tonnes a month before 2023. While central banks and institutions have the largest appetite for gold, Goldman Sachs hinted that rising geopolitical tensions will trigger retail investors to scoop up the precious metal in the near future. The report reads:

Last year, gold saw its strongest rally, setting multiple all-time highs in a meteoric run, with Goldman Sachs correctly predicting the price surge. The Wall Street giant remains one of gold’s most bullish advocates despite its foray into digital assets.