Goldman Sachs has revised its gold price outlook downward following a shift toward tighter US monetary policy, although the bank continues to expect substantial central bank purchases to support the precious metal over the longer term.
The investment bank reduced its year-end 2026 forecast from $4,650 to $4,150 per ounce and lowered its year-end 2027 projection from $5,400 to $4,800.
Strategists led by Lina Thomas attributed the changes to the Federal Reserve’s more hawkish stance, including expectations for another interest rate increase in December.
The revised outlook assumes that tighter monetary conditions will limit investor demand for gold as protection against currency depreciation and policy uncertainty.
Monetary Policy Shift Changes Gold Market Outlook
Goldman expects speculative and hedging demand for gold to moderate as higher interest rates reduce the metal’s relative attractiveness.
The bank anticipates that demand for call options linked to concerns about monetary and fiscal policy will move closer to historical norms rather than return to the elevated levels seen earlier in 2026.
Strategists compared the current environment with 2022, when central bank buying provided underlying support but rising interest rates restricted broader investment demand.
The combination could result in more moderate gold price appreciation over the coming quarters.
Central Banks Expected to Buy 60 Tonnes Monthly
Goldman continues to identify official-sector purchases as the principal source of structural support for gold.
The bank forecasts central bank acquisitions averaging 60 tonnes per month across 2026 and 2027, compared with approximately 17 tonnes per month before 2022.
Its latest assessment indicates that purchases are currently running at approximately 85 tonnes per month on a seasonally adjusted three-month basis.
“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 said.
Emerging-market central banks, particularly China, are expected to remain important buyers because their gold holdings are relatively low compared with potential long-term allocations.
Developed-market institutions have been less active, partly reflecting their already substantial gold reserves.
Goldman also noted growing attention to the location and security of official gold holdings.
“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 wrote.
Interest Rate Cuts Could Revive Private Investment Demand
The bank expects the Federal Reserve to begin reducing interest rates in late 2027, with further easing extending into early 2028.
Lower rates could improve gold’s appeal to private investors by reducing the opportunity cost of holding a non-yielding asset.
In the meantime, Goldman sees a more difficult environment for shorter-term market participants.
Commodity trading advisers and macro hedge funds could face continued challenges over the next three to six months because of higher interest rates, volatile energy markets and strict risk-management constraints.
Further increases in oil prices could also contribute to systematic selling pressure.
Gold Faces Downside Risks but Longer-Term Opportunities Remain
Goldman’s revised base-case forecast places gold at $4,800 per ounce by the end of 2027, with central bank purchases accounting for most of the anticipated 15% price appreciation.
However, the bank identified additional downside risks if the Fed raises interest rates again in March 2027, postpones expected cuts or signals a higher terminal rate.
Under a more restrictive monetary policy scenario, Goldman estimates that gold could finish 2027 at approximately $4,660 per ounce.
Alternatively, renewed concerns about government finances and fiscal sustainability could increase demand for gold as a defensive asset, potentially lifting prices above the base-case projection.
While near-term trading conditions may remain difficult, Goldman suggested that longer-term investors could find opportunities during the current price correction, particularly those seeking exposure to sustained central bank demand.
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