Goldman Sachs changed its mind! It lowered its gold price target and no longer expects it to reach $3,000 by the end of the year

Federal Reserve rate cuts slow down, will gold prices also slow down?

Goldman Sachs analysts Lina Thomas and Daan Struyven have adjusted their gold price forecasts in a recent report, pointing out that the slowdown in the pace of U.S. monetary policy easing in 2025 will suppress demand for gold ETFs. Therefore, Goldman Sachs expects gold prices to reach $2,910 per ounce by the end of this year, instead of the previously expected $3,000 per ounce。

Goldman Sachs also expects that as the Federal Reserve continues to cut interest rates, gold prices will reach $3,000 per ounce by mid-2026.

Considering that U.S. inflation will continue to decline, Goldman Sachs expects the Federal Reserve to cut interest rates by 75 basis points this year, lower than the previously expected 100 basis points—however, this is still more dovish than the current market pricing.

Goldman Sachs pointed out that gold ETF inflows were below expectations last December, mainly due to reduced uncertainty following the U.S. elections, which also led to a lower starting point for gold prices at the beginning of this year. Analysts stated:

“The opposing forces of weakened speculative demand and structural central bank buying have offset each other, keeping gold prices within a range of fluctuations in recent months.”

Goldman Sachs analysts also emphasized that the willingness of central banks to purchase gold will continue to be a key driver of long-term gold prices, expecting that by mid-2026, the average monthly gold purchase volume will remain at 38 tons.

Earlier in mid-November, the Struyven team had predicted that gold prices would rise to $3,000 per ounce by the end of 2025, with structural driving factors for the price increase coming from central bank demand and cyclical driving factors from Federal Reserve rate cuts, while the main downside risks come from rising interest rates and a strengthening dollar.

In 2024, gold prices surged by 27%, reaching a historic high. This wave of increase was supported by the easing of U.S. monetary policy, increased safe-haven demand, and continued gold purchases by global central banks. However, since early November last year, the momentum of gold has slowed down, mainly due to the strengthening of the dollar following Trump's election victory. Recently, as Federal Reserve officials emphasized the need for more cautious rate cuts this year to address inflation concerns, gold prices have begun to come under pressure