American Banking giant Goldman Sachs I cut her off gold Price forecasts 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.
This revision reflects Goldman Sachs’s view that the Federal Reserve is unlikely to cut interest rates this year, reducing expectations for demand for gold through exchange-traded funds.ETFs).
The updated forecast comes as gold faces pressure from a stronger US dollar and expectations of monetary policy tightening. Gold closed Friday at about $4,155 an ounce, down about 4% year to date.
Goldman Sachs lowered its gold price forecast after lowering expectations for a US interest rate cut, reducing expectations for flows into gold-backed ETFs.
The bank now expects interest rate cuts in June and December 2027, rather than starting in late 2026. The adjustment comes on the heels of a Federal Reserve meeting where policymakers kept interest rates unchanged but signaled growing support for future increases.
High interest rates generally affect gold prices because the metal does not generate income, making yield-producing assets more attractive Investors.
Bullish case for gold
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 continued demand for gold as a portfolio hedge.
“Our views on gold prices remain structurally constructive but tactically cautious, with near-term downside risks and medium-term upside risks,” the analysts said.
At the same time, Goldman Sachs expects official sector purchases of gold to average 50 tons per month this year and 40 tons per month in 2027.
However, analysts warned that additional Fed tightening could create further downside risks.
In a scenario in which interest rates rise further and demand for gold as a macroeconomic hedge weakens, the bank expects gold to end the year near $4,400 per ounce.
Overall, gold sentiment weakened after the Federal Reserve signaled that interest rates may remain high for longer. While interest rates were left unchanged, nine of 19 policymakers expected to raise rates at least once again this year.
The tightening outlook has boosted the US dollar to a one-year high and raised expectations that interest rates will be raised again before the end of the year.
A stronger dollar and higher interest rates usually affect gold by making the non-yielding metal less attractive to investors.
