Goldman Sachs has revised its year-end gold price target downward by $500, setting a new forecast of $4,900 per ounce. This adjustment comes after the investment bank altered its expectations regarding the Federal Reserve's monetary policy, now believing the Fed will not implement interest rate cuts in 2026. Previously, Goldman Sachs had maintained a more bullish outlook, forecasting gold to reach $5,400 per ounce.
The rationale behind this significant downgrade stems from Goldman Sachs economists' re-evaluation of the US economic landscape. They now anticipate a stronger-than-expected labor market and persistent inflation, which will lead the Federal Reserve to maintain higher interest rates for a longer period. Chief US Economist David Mericle stated that while a Fed rate hike is unlikely, the environment will put pressure on commodity prices. The bank now expects the Fed's final two rate cuts to occur in June and December 2027, rather than the previously anticipated December 2026 and March 2027.
Despite the reduced year-end target, Goldman Sachs analysts Lina Thomas and Daan Struyven still foresee an upward trend for gold in the second half of the year. However, this upward momentum is expected to be considerably more constrained than previously projected due to the revised interest rate outlook. The current market situation reflects this pressure, with gold (ounce) retreating to the $4,130 level and silver (ounce) falling to $63.46. Analysts suggest that the Fed's sustained high interest rate environment will continue to exert downward pressure on commodity prices in the near term.
