After anticipating fewer rate cuts by the Federal Reserve, Goldman Sachs Group Inc. adjusted its forecast, projecting that gold will reach $3,000 an ounce by mid-2026 instead of by the end of 2025.
Analysts Lina Thomas and Daan Struyven expect gold prices to reach $2,910 an ounce by the end of the year, partly due to slower rate cuts in 2025, which are reducing demand for bullion-backed ETFs. Additionally, weaker-than-expected investment in gold ETFs, following reduced uncertainty after the US election, has contributed to a lower starting price for gold going into the year.
The analysts noted that a drop in speculative demand and higher central bank buying have balanced each other out, keeping gold prices stable in recent months. Moreover, they pointed out that central banks will be the key factor driving gold prices in the long term, with the expectation that they will buy an average of 38 tons of gold each month until mid-2026.
Last year, gold prices soared by 27%, driven by US monetary easing, safe-haven demand, and continued central bank buying. However, the rally slowed in November after Donald Trump’s election win, which hardened the US dollar. Furthermore, gold has recently been under pressure as the Federal Reserve has become more cautious about lowering borrowing costs this year amid renewed inflation concerns.
Goldman economists now predict a 0.75 percentage points interest rate cut this year, down from the previous forecast a full percentage point. This forecast is lower than current market expectations, as they anticipate inflation to keep decreasing. Additionally, they believe that policies under the Trump administration are unlikely to lead to higher interest rates.
