Goldman lowered its gold price forecast by 9%. It had previously successfully predicted the 2025 rally.

Goldman Sachs Group has lowered its year-end gold price forecast by $500 per ounce. The main reason is that the market no longer expects the Federal Reserve (Fed) to cut interest rates in 2026, according to Bloomberg. Nevertheless, even Goldman’s new forecast is significantly higher than the current price of gold.

Goldman's new forecast puts the price of gold at $4,900 per troy ounce in December, according to Bloomberg. This is roughly 18% higher than current prices: on June 19, spot gold prices stood at $4,155.

The new target price of $4,900 per ounce means that the metal is still expected to rise in price in the second half of the year, albeit at a more modest pace than previously forecast, noted analysts Lina Thomas and Daan Streven.

"Our view on gold prices remains structurally positive but tactically cautious: we see short-term downside risks and medium-term upside potential," they said.

According to analysts, the downward revision of the forecast is due to expectations of a smaller inflow of funds into gold-backed exchange-traded funds (ETFs). This came after the bank’s economists pushed back their expectations for U.S. rate cuts to June and December 2027, instead of December of this year and March of next year.

In addition, concerns about the central bank’s independence may now subside following the Fed’s first meeting under Kevin Warsh’s leadership, analysts added. The regulator removed all language from its statement that indicated a bias toward lowering rates. Warsh succeeded Jerome Powell, whom President Donald Trump had repeatedly criticized for not cutting rates aggressively enough. Trump nominated Warsh for the position of Fed chair.

If the Fed does indeed raise interest rates, “demand for gold as a macroeconomic hedging tool could begin to decline steadily,” and prices could reach $4,400 by the end of the year, experts warn.

Nevertheless, certain factors continue to support gold prices, including purchases by central banks: strategists added that these are expected to total 50 metric tons per month this year and 40 metric tons per month next year.

Goldman has remained one of the most consistent and prominent “bulls” on gold in recent years, and the revision to its forecast marks a slight shift in its rhetoric, according to Bloomberg. Among the bank’s string of positive forecasts, its recommendation from late 2024 stands out, when it advised investors to “bet on gold,” accurately predicting the rally in 2025.

Gold has faced challenges in recent months: the conflict in the Middle East initially pushed up energy prices, which in turn heightened expectations of tighter monetary policy. This week, the Fed decided to leave interest rates unchanged, but members of the Federal Open Market Committee are increasingly leaning toward raising them this year. At the same time, the new Fed Chair, Kevin Warsh, has pledged to restore price stability, Bloomberg reports.

After rallying to a record high of just under $5,600 per ounce in late January, gold lost momentum: in May, prices fell for the third consecutive month.

This article was AI-translated and verified by a human editor