Goldman Sachs delays its prediction for gold prices to $3,000 until mid-2026, with the Federal Reserve's slowdown in interest rate cuts being the main reason
Goldman Sachs has postponed its prediction for gold prices to $3,000 until mid-2026, citing market expectations that the Federal Reserve will reduce the pace of interest rate cuts. Analysts point out that the slowdown in monetary easing in 2025 will suppress demand for gold ETFs, with gold prices expected to reach $2,910 per ounce by the end of the year. Central bank purchases remain a long-term driver for gold prices, with an average monthly purchase volume expected to reach 38 tons by mid-2026. The Federal Reserve has cut interest rates by 75 basis points this year, lower than market expectations
According to the Zhitong Finance APP, Goldman Sachs expects that gold prices will not reach $3,000 per ounce by the end of 2025 and has postponed this forecast to mid-2026, due to market expectations that the Federal Reserve will reduce the pace of interest rate cuts.
Goldman Sachs analysts, including Lina Thomas and Daan Struyven, stated that the slowdown in monetary easing in 2025 will suppress investor demand for gold ETFs, with gold prices expected to reach $2,910 per ounce by the end of the year. The analysts noted in a report that the flow of ETF funds in December last year was weaker than expected, driven by the easing of uncertainty following the U.S. elections, which led to a lower pricing starting point for the new year.
The analysts stated, "The opposing forces of declining speculative demand and structurally increasing central bank purchases effectively offset each other, keeping gold prices within a range of fluctuations over the past few months." They added that central bank purchases will remain a key long-term driver of gold prices, and they expect the average monthly purchase volume by central banks to reach 38 tons by mid-2026.
Supported by the Federal Reserve's monetary policy easing, safe-haven demand, and continued purchases by central banks around the world, gold soared 27% in 2024, reaching an all-time high. However, the rise in gold prices stalled in early November last year as Trump won the election and boosted the dollar. As Federal Reserve officials recently emphasized concerns about inflation and indicated the need for a more cautious approach to interest rate cuts, gold prices came under pressure.
Goldman Sachs economists currently expect the Federal Reserve to cut interest rates by 75 basis points this year, down from a previous forecast of 100 basis points. This forecast is more dovish than current market expectations, as Goldman Sachs believes that underlying inflation is trending downward. Additionally, Goldman Sachs economists expressed skepticism about whether potential policy changes under the incoming Trump administration would lead to rising interest rates