Goldman Sachs has lowered its gold price forecast, citing the potential for more Federal Reserve rate hikes. The bank now expects gold at $4,150 a troy ounce by the end of 2026, but sees prices picking up in 2027.
Goldman Sachs cut its end-2026 gold target to $4,150 a troy ounce, down from a previous target of $4,650. The bank points to the potential for more Federal Reserve rate hikes.
Gold's continuous contract fell 0.8% to $4,082 early Friday. That is down from a record high of over $5,500, reached in January.
Fed hawkish shift drives the cut
Commodities strategists Lina Thomas and Daan Struyven wrote in a Thursday note that portfolio positioning is likely to adapt to the central bank's recent hawkish shift. That stance started to tilt because of persistent inflation, as the war in Iran led to a spike in energy prices.
Markets are pricing in a 71% chance of the Fed raising rates by one-quarter point at its December meeting, according to FedWatch. Bullion and interest rates generally have an inverse relationship, so gold prices tend to decline when rates rise.
The strategists noted that the recent bond-market rally brought the market's pricing of future hikes closer to the bank's forecasts. Even with lower bond yields, the Fed still may take an aggressive response, which would mean the boost gold often gets from declining yields likely wouldn't materialize.
Goldman sees a recovery in 2027
Goldman expects gold at $4,800 an ounce next year, still down from its prior projection of $5,400. Thomas and Struyven see the current setup as similar to 2022's, when gold rose more gradually because strong central-bank demand contrasted with investor concerns over higher rates.
Goldman economists hold that if central banks begin to loosen policy in late 2027 through 2028, prices will likely increase again. For longer-term investors, the strategists wrote that gold's current consolidation could offer an attractive entry point.
Source: MarketWatch
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