Goldman Sachs Slashes Gold Forecast, Cites Fed Rate Cut Delay
Quick Look
- Goldman Sachs lowered its year-end gold price forecast by $500 to $4,900, anticipating no US Federal Reserve interest rate cuts this year, potentially pushing them to March and December 2027.
- This cautious outlook also impacts cryptocurrencies.
AI-generated summary
Why It Matters
Goldman Sachs has revised its year-end gold price forecast downwards, citing the US Federal Reserve's likely delay in cutting interest rates. This decision impacts market expectations for both gold and cryptocurrencies.
Goldman Sachs lowered its year-end gold forecast by $500 an ounce, citing expectations that the US Federal Reserve won’t cut interest rates this year.
The revised target places gold at $4,900, down from earlier estimates of $5,400. It comes on the assumption that the next Fed cuts could be pushed to March 2027 and December 2027.
“Our gold price views remain structurally constructive but tactically cautious, with near-term downside risk and medium-term upside risk,” Goldman Sachs commodity analysts Lina Thomas and Daan Struyven said, according to Bloomberg.
A delay in US interest rate cuts could also weigh on cryptocurrencies, as lower interest rates tend to be favorable for digital assets such as Bitcoin. The war in Iran has also taken its toll on the assets.
Bitcoin has fallen 28.3% since January, and gold has declined more than 22% since its January all-time high of $5,327 per ounce. Gold is now just $135 away from dipping below $4,000, a level not seen since November, according to GoldPrice.
Gold price one-year chart. Source: GoldPrice
Related: Bitcoin’s deeply discounted versus AI-stocks, but hawkish Fed risk lingers: Bitwise
Last week, analysts cautioned that Bitcoin and gold may face further headwinds this year following a 4.2% annual increase in the US Consumer Price Index in May, coupled with the conflict in the Middle East.
Since gold pays no yield, rising rates could mean that holding gold becomes more expensive relative to bonds or cash, and the market may be repricing the entire “easy money” thesis that drove gold to record highs earlier this year.
“Only when inflation drops, rate cuts become viable, and liquidity improves alongside lower capital costs, will the overall risk appetite truly reverse,” HashKey Group senior researcher Tim Sun told Cointelegraph.
CME’s FedWatch tool shows a high chance of rates staying the same or rising in the remaining months of 2026, compared with the current target rate of 3.5% to 3.75%.
What to Watch
AI outlook — possibilities, not facts
US Federal Reserve interest rate cuts pushed to March 2027 and December 2027.
Speculative · Within months
Open Questions
- When will the Fed actually start cutting rates?
- What specific inflation levels are needed for rate cuts?
- How will geopolitical events further influence asset prices?
