Goldman Sachs has lowered its gold price forecasts for the end of 2026 and 2027, citing the Federal Reserve’s increasingly hawkish monetary policy stance and its impact on investor demand. However, the investment bank maintained a positive longer-term outlook, supported by substantial central bank purchases.
Strategists led by Lina Thomas reduced their end-2026 gold price target to $4,150 per ounce from $4,650. The forecast for the end of 2027 was lowered to $4,800 per ounce from $5,400.
The revised projections assume that the Fed’s tighter policy stance, including an anticipated interest rate increase in December, will limit demand for gold as protection against currency depreciation and broader economic policy risks.
Higher Interest Rates Reduce Gold’s Appeal
Goldman expects investor demand for gold as a hedge against monetary and fiscal uncertainty to return toward historical averages rather than revisit the elevated levels recorded earlier in 2026.
The bank compared current market conditions with 2022, when strong central bank purchases supported gold prices but higher interest rates limited investment demand.
Higher borrowing costs generally reduce the attractiveness of gold because the precious metal does not generate interest income.
Goldman also expects demand for gold call options, which can reflect investor interest in protection against policy-related risks, to moderate.
Central Bank Purchases Remain Key Price Support
Despite reducing its near-term forecasts, Goldman continues to view central bank demand as a significant structural driver of gold prices.
The bank expects central banks to purchase approximately 60 tonnes of gold per month throughout 2026 and 2027, substantially above the average of 17 tonnes recorded before 2022.
Its latest estimate places current purchases at approximately 85 tonnes per month, based on a seasonally adjusted three-month average.
“We retain our longer-term constructive view on structurally strong central bank demand – which drives most of the 15% price upside we forecast by end-2027,” the strategists wrote.
Goldman noted that emerging-market central banks, particularly China, continue to hold relatively low gold allocations compared with potential long-term reserve targets.
Developed-market central banks have generally participated less in the recent purchasing trend, partly because they already maintain substantial historical gold reserves.
“But the debate is increasingly shifting from whether to own gold to where to store it, pointing to broader concerns around reserve security and cross-country trust,” the strategists added.
Fed Rate Cuts Could Support Gold in Late 2027
Goldman expects gold prices to receive additional support when the Federal Reserve begins reducing interest rates.
The bank’s economists anticipate rate cuts beginning in late 2027 and continuing into early 2028, potentially easing pressure on gold and encouraging renewed private investment demand.
For shorter-term investors, however, the outlook remains challenging.
Goldman identified rising interest rates, uncertain energy prices and restrictive risk limits as potential obstacles for commodity trading advisers and macro hedge funds over the next three to six months.
Higher oil prices could also trigger additional selling by systematic investment strategies.
Goldman Identifies Risks and Opportunities
The bank warned that gold could face further downward pressure if the Fed raises rates again in March 2027, delays monetary easing or increases its projected terminal interest rate.
Under that scenario, Goldman estimates gold could reach $4,660 per ounce by the end of 2027, below its revised base-case forecast of $4,800.
Conversely, renewed concerns about government debt sustainability and fiscal policy could increase demand for gold as a hedge, potentially pushing prices above the bank’s central forecast.
Goldman suggested that longer-term investors seeking exposure to sustained central bank purchases or protection against economic policy risks may view the current correction as a potential entry opportunity.