Goldman Cuts Gold Target to $4,150, Says Wait on Bullion

Goldman Sachs now expects gold to settle at $4,150 a troy ounce by the end of 2026, down from its previous target of $4,650, as the prospect of more Federal Reserve interest-rate hikes pressures bullion.

The call landed in a Thursday note from commodities strategists Lina Thomas and Daan Struyven. Gold's continuous contract fell 0.8% to $4,082 early Friday — a long slide from a record high above $5,500 reached only in January.

Why is Goldman turning more cautious on gold?

The strategists argue portfolio positioning is likely to adapt to the Fed's recent hawkish shift. That shift began as persistent inflation took hold after the war in Iran drove a spike in energy prices, worsening cost-of-living pressures.

The mechanics are straightforward: bullion and interest rates generally move inversely. When rates rise, gold prices tend to decline.

Markets are currently pricing in a 71% chance of the Fed raising rates by one-quarter point at its December meeting, according to FedWatch. A possible second hike next year is also widely anticipated.

Takeaway: a hawkish Fed is the single biggest weight on Goldman's gold math.

What happens to the 2027 forecast?

Goldman still sees gold recovering — just less than before. The bank expects prices to reach $4,800 an ounce in 2027, down from its prior projection of $5,400.

Thomas and Struyven noted that the recent bond-market rally helped bring the market's pricing of future hikes closer to the bank's own forecasts. But even though bond yields have declined, the Fed still looks likely to respond aggressively. That means the boost gold prices often get from falling yields probably wouldn't materialize.

The strategists' base case assumes the central bank's hawkish shift — plus a hike next month — will help contain investors' concerns over a possible debasement of the dollar. Here too, the relationship cuts against gold: when the dollar strengthens, gold often weakens.

"We therefore assume macro-policy hedge demand for gold – reflected in call-option demand – normalizes toward its historical average rather than returning to the elevated levels seen earlier this year," they wrote.

Takeaway: the hedge bid that powered gold's record run is fading, in Goldman's view.

Is 2022 the right template?

For Thomas and Struyven, the current setup mirrors 2022, when gold prices rose more gradually because strong central-bank demand for the metal clashed with investor worries over higher rates.

Goldman economists hold that if central banks begin to loosen policy in late 2027 through 2028, prices will likely climb again as official bullion buying competes with demand from private investors.

For longer-term investors, the strategists wrote that gold's current consolidation could offer an attractive entry point.

The near-term message: Goldman isn't abandoning gold — it's saying the rate cycle has to break first.