Goldman Slashes Gold Forecast by $500 as Fed's Hawkish Turn Reshapes Outlook
Goldman Sachs cut its year-end gold forecast by $500 to $4,900, citing expectations that the Fed won't cut rates in 2026 after a hawkish tone set by Chair Kevin Warsh, though central bank buying continues to support prices.
Goldman Sachs has slashed its year-end gold price target by $500, pointing to a Federal Reserve that now appears unlikely to deliver interest rate reductions in 2026.
Commodity strategists Lina Thomas and Daan Struyven stated in a Thursday research note that they anticipate gold reaching $4,900 per ounce by this December, which is lower from a prior estimate of $5,400. This prediction change follows their belief that the Fed won't cut rates until June and December of next year.
The precious metal has tumbled 15% since the beginning of the Iran conflict, as the energy price surge tied to the Strait of Hormuz closure stoked inflation fears. And despite recent deal made by the US and Iran, the pressure on gold price keeps ongoing.
The strategists also cited reduced apprehension about central bank independence following the surprisingly hawkish inaugural meeting chaired by Kevin Warsh, where nine FOMC members penciled in a rate increase this year.
Despite the downgrade, Goldman's outlook remains constructive, partly anchored in continued central bank gold purchases. While central bank current purchasing records have cooled from the 2024 peak of 67 tonnes monthly, they are still buying at roughly 51 tonnes monthly.
Thomas and Struyven argued that geopolitical frictions eventually will push investors toward a larger gold allocation.