Goldman’s cut adds weight to the view that rates, not geopolitics, are setting gold’s direction for now. With December Fed hike odds near 80%, that keeps a lid on near-term rallies. The bank’s warning that higher oil prices could trigger systematic selling fits the way gold has traded through the Iran war: escalation lifts crude and yields, which weighs on bullion. Weekend strikes in Iraq and Saudi Arabia raise that risk this week. The heavy central bank bid underpins the longer-term case and is likely to cushion deeper dips. A shift toward Fed easing in late 2027 is the bank’s main upside catalyst.
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Earlier:
Gold ticks higher on softer oil, but Fed’s 80% December hike odds cap gain
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Goldman has lowered its gold targets as Fed hikes erode hedging demand, but it is betting that relentless central bank buying will still carry bullion higher by the end of 2027.
Summary:
Goldman cut its end-2026 gold target to $4,150 an ounce from $4,650, and its end-2027 target to $4,800 from $5,400.
The bank cites a hawkish Fed, including an expected December hike, curbing demand for gold as a policy hedge.
Central banks are expected to buy around 60 tonnes a month in 2026 and 2027. Current buying is estimated at around 85 tonnes.
Central bank demand drives most of the roughly 15% upside Goldman forecasts by end-2027.
A more hawkish Fed path could leave gold near $4,660 by end-2027, while fiscal worries could push it above the base case.
Fed rate cuts, expected from late 2027, are seen as a further source of support.
Goldman Sachs has cut its gold price forecasts, lowering its end-2026 target to $4,150 an ounce from $4,650 and its end-2027 target to $4,800 from $5,400, as an increasingly hawkish Federal Reserve weighs on investor demand for the metal.
The bank’s strategists, in a note dated November 5, said the revisions assume the Fed’s tighter stance, including an expected rate hike in December, will limit demand for gold as a hedge against currency debasement and wider policy risk. They expect that hedging demand to drift back toward historical averages rather than return to the elevated levels seen earlier this year, and they see interest in gold call options moderating as well.
Goldman compared the current backdrop with 2022, when heavy central bank buying underpinned prices but rising interest rates held back investment demand. Higher rates make interest-bearing assets more competitive with gold, which offers no yield.
Even so, the bank kept a constructive longer-term view, anchored by official-sector demand. It expects central banks to buy around 60 tonnes a month through 2026 and 2027, well above the pre-2022 average of 17 tonnes. It estimates current purchases at roughly 85 tonnes a month on a seasonally adjusted three-month basis. That buying drives most of the roughly 15% upside Goldman forecasts by the end of 2027. The strategists noted that emerging-market central banks, particularly China, still hold relatively small gold allocations compared with potential long-term targets. They also said the debate is increasingly shifting from whether to own gold to where to store it, reflecting concerns over reserve security and trust between countries.
Goldman expects further support once the Fed begins cutting rates, which its economists see starting in late 2027 and continuing into early 2028. In the nearer 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 a further 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 cut 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.
This article was written by Eamonn Sheridan at investinglive.com.
