Goldman cuts gold price forecasts after hawkish Fed

Goldman said investor demand for gold has been hit by “currency debasement” concerns easing from earlier in the year, when buyers piled into the metal as a hedge against policy risk. The strategists said call-option buying still shows some hedging interest, but they do not expect the same wave of private demand to return.

The report marks a more cautious turn after this year’s strong rally in bullion and comes as Fed policy expectations tighten. CME’s FedWatch tool puts the probability of a December rate hike at 72.8%, while US inflation readings remain elevated enough to keep pressure on policymakers.

Goldman still sees central banks as the main pillar of support for the market, projecting purchases of 60 tonnes a month through 2026 and 2027, versus 17 tonnes a month before 2022. It estimates central banks are currently buying about 85 tonnes a month, and says that structural demand should drive most of the 15% upside it still sees by end-2027.

Even so, the bank said gold is likely to struggle until the Fed shifts to cuts in the second half of 2027, when lower real rates could allow private investor demand to re-enter the market. Until then, investors are being told to expect a market more like 2022, when central bank buying cushioned prices but elevated rates capped gains.

Gold futures have already slipped below $4,050, while SPDR Gold Shares has fallen back toward its 50-day moving average after losing momentum from earlier highs. Miners have also weakened, with the VanEck Gold Miners ETF tracking below its recent peaks as traders reassess how much upside remains if the Fed stays restrictive longer than expected.

The key risk for bulls is that Goldman’s base case proves too dovish. If the Fed hikes again in March 2027, delays cuts or lifts its terminal rate, the bank says gold could still reach $4,660 by end-2027, but that would remain below its new base case of $4,800.