Goldman Cuts Gold Forecast, Signaling Fed Pressure
Goldman Sachs cut its year-end gold price forecast by $500 per ounce after the Federal Reserve was no longer expected to ease policy in 2026. Goldman's new target for December is now $4,900 per ounce, still indicating upside potential in the second half of the year, but lower than its previous estimate.
Goldman analysts Lina Thomas and Daan Struyven said their outlook for gold remains structurally constructive but more cautious in the short term. This revised forecast marks a slight shift in tone from Goldman, which has been known for several years as one of the most bullish institutions on gold.
Pressure on gold increased after the Fed kept interest rates unchanged but signaled that some policymakers support a hike this year. New Fed Chairman Kevin Warsh also reiterated a commitment to restoring price stability, leading the market to believe the room for policy easing is increasingly limited.
Goldman's target cut was primarily driven by lower projections of gold ETF inflows. Goldman economists now expect US interest rate cuts to occur in June and December of next year, later than previously projected. If the Fed does raise interest rates, Goldman believes demand for gold as a macro policy hedge could weaken for longer, with prices potentially hovering around $4,400 by year-end.
However, gold's support hasn't completely disappeared. Goldman still sees central bank purchases as a key driver, estimating official sector purchases of around 50 tons per month this year and 40 tons per month next year. Central bank demand is a structural factor that can help cushion the pressure from high interest rates.
Gold prices last traded around $4,165 per ounce and are on track for a third weekly decline. After briefly hitting a record near $5,600 per ounce in late January, gold has recorded its third consecutive monthly decline in May. The market's next focus will be on US inflation data, the Fed's interest rate direction, gold ETF flows, and the consistency of central bank purchases. (arl)
Source: Newsmaker.id
