Goldman trims gold forecasts on hawkish Fed stance

Goldman's downgrade strengthens the argument that interest rates, rather than geopolitical factors, are currently the primary driver of gold prices. With market pricing suggesting an almost 80% probability of a December rate hike from the Fed, near-term upside for gold is constrained. The bank cautioned that rising oil prices might trigger systematic selling, a pattern observed during the Iran conflict, where escalation boosts crude and yields, weighing on bullion. Weekend strikes in Iraq and Saudi Arabia heighten that risk in the coming week. Significant central bank buying underpins the longer-term outlook and is expected to soften more pronounced downturns. A pivot toward Fed easing in late 2027 is identified as the primary catalyst for upward movement.

Earlier:

• Gold ticks higher on softer oil, but Fed's 80% December hike odds cap gain

Goldman has reduced its gold price projections as Federal Reserve rate increases diminish hedging demand, though it anticipates sustained central bank purchases will still push bullion higher by the end of 2027.

• Goldman revised its end-2026 gold forecast to $4,150 per ounce from $4,650, and its end-2027 forecast to $4,800 from $5,400.
• The bank points to the Fed's hawkish posture, including an anticipated rate hike in December, dampening demand for gold as a policy hedge.
• Central banks are projected to acquire approximately 60 tonnes per month in 2026 and 2027. Current purchases are estimated at around 85 tonnes.
• Central bank demand accounts for most of the roughly 15% price appreciation Goldman predicts by end-2027.
• A more restrictive Fed trajectory could see gold near $4,660 by end-2027, whereas fiscal concerns could push it above the baseline forecast.
• Fed rate cuts, expected from late 2027, are viewed as an additional source of uplift.

Goldman Sachs has lowered its gold price projections, cutting its end-2026 target to $4,150 an ounce from $4,650 and its end-2027 target to $4,800 from $5,400, as a more hawkish Federal Reserve dampens investor appetite for the precious metal.

In a note dated November 5, the bank's strategists indicated the revisions assume the Fed's tighter policy, including a projected rate rise in December, will curtail demand for gold as a hedge against currency debasement and broader policy risk. They anticipate such hedging demand will gradually return to historical norms rather than revert to the heightened levels seen earlier this year, and they also see interest in gold call options easing.

Goldman drew a comparison with 2022, when substantial central bank buying supported prices, but rising interest rates held back investment demand. Higher rates make yield-bearing assets more appealing compared with gold, which generates no income.

Nevertheless, the bank maintained a positive long-term outlook, supported by official-sector demand. It forecasts central banks will purchase around 60 tonnes each month through 2026 and 2027, far exceeding the pre-2022 average of 17 tonnes. Current purchases are estimated at roughly 85 tonnes monthly on a seasonally adjusted three-month basis. This buying accounts for most of the roughly 15% upside Goldman forecasts by end-2027. The strategists noted that emerging-market central banks, particularly China, still have relatively small gold allocations compared with potential long-term targets. They added that the conversation is increasingly shifting from whether to hold gold to where to store it, reflecting worries about reserve security and trust between nations.

Goldman expects additional support once the Fed begins cutting rates, which its economists foresee starting in late 2027 and continuing into early 2028. In the shorter term, however, the bank sees headwinds over the next three to six months for commodity trading advisers and macro hedge funds, from rising rates, uncertain energy prices and tighter risk limits. It warned that higher oil prices could prompt further selling by systematic strategies.

On the risks, Goldman said an additional Fed hike in March 2027, delayed easing or a higher projected terminal rate could leave gold at around $4,660 by end-2027, below its base case. Renewed worries over government debt sustainability, by contrast, could lift prices above its central forecast.

The downgrade follows a sharp reversal for bullion. Gold gained around 64% in 2025, its best year since 1979, and peaked near $5,600 in January before falling to around $4,070 by November 6, nearly 27% below that high. Goldman said longer-term investors seeking exposure to central bank buying or protection against policy risk may see the correction as a potential entry point.