Goldman Sachs Slashes 2026 Gold Price Target Amid Fed Rate Hike Fears

Goldman Sachs has revised its 2026 year-end gold price target downward to $4,900 per ounce, a decrease from its previous $5,400 forecast. This adjustment stems from the growing probability that the U.S. Federal Reserve will opt for interest rate hikes this year, rather than the anticipated cuts. Analysts at the firm noted that if the Fed indeed decides to raise rates, their year-end gold price prediction could be further reduced by another $500, bringing it to $4,400 per ounce.

The initial $5,400 target was based on strong market performance and increasing demand from private investors earlier in the year. Despite geopolitical tensions in the Middle East and concerns about global inflation, which caused a sharp decline in gold prices in late March, Goldman Sachs' target remained unchanged. However, these concerns have intensified, diminishing the likelihood of Fed rate cuts and negatively impacting non-yielding assets like gold.

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We remain structurally bullish on gold prices, but strategically cautious, with downside risks in the short term and upside potential in the medium term.

Analysts Lina Thomas and Daan Struyven stated in a report that the new $4,900 target implies gold prices will rise in the second half of this year, albeit at a slower pace than previously expected. They maintain a structurally bullish outlook on gold prices but advise strategic caution due to short-term downside risks. The current gold price has already fallen to around $4,100 per ounce, a 27% decrease from its January high, and has experienced three consecutive months of decline from March to May, resulting in a 4% year-to-date drop.

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demand for gold as a hedge against macro policy may continue to weaken.