Goldman Sachs slashed its year-end 2026 gold price forecast by $500 to $4,900 per ounce, citing weaker inflows into gold-backed exchange-traded funds and a shifting interest-rate outlook that could further dent bullion's appeal. The revision comes after global gold ETFs saw roughly $2 billion in outflows during May, even as European funds posted fresh inflows.
ETF outflows and shifting investor sentiment
The bank's downgrade is rooted in a broad retreat from gold ETF products. Asian funds recorded their first monthly outflow since August 2025, with $1.2 billion leaving the region in May. That contrasts with European gold ETFs, which attracted new money over the same period. The divergence highlights a fragmented investor appetite for gold.
Bearish sentiment is also visible in options markets. The put-call skew on the largest US gold-backed ETF (GLD) hit 1.03, near the highest level since 2017. A reading above 1 means puts are more expensive than calls, signaling traders are hedging against downside or betting on further declines.
Rate-cut delay and the risk of a hike
Goldman Sachs economists have pushed back their forecast for US rate cuts to June and December 2026. Previously they expected reductions in December 2026 and March 2027. The change reflects a Federal Reserve that held its benchmark rate at 3.50%–3.75% at its last meeting, with growing support for hikes. Nine Fed officials now project at least one rate increase in 2026.
Rob Kaplan, Goldman vice chairman and former president of the Dallas Fed, said a rate hike could come as soon as September. If the Fed does raise rates, Goldman sees gold sliding to $4,400 by year-end as its appeal as a policy hedge fades.
Central banks still buying
Not all demand is weak. Central banks returned to net gold purchases in April, adding 19 tons. A survey cited by Goldman found 45% of central banks plan to increase their gold reserves over the next year. That buying provides a price floor, even as other sources of demand soften.
Goldman analysts described their stance as 'structurally constructive but tactically cautious' on gold. The bank still expects prices to rise over the long term, but sees near-term headwinds from ETF outflows and the potential for higher US interest rates.
Whether that tactical caution turns into a deeper retreat depends on how soon the Fed acts — and whether ETF investors start buying again before the next policy meeting.
