Waller’s “hawkish debut,” Goldman Sachs lowers gold price target, “If there really is a rate hike this year, gold prices will fall further.”

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Hit by the dual shocks of the Federal Reserve not cutting rates in 2026 and hawkish statements from new Chair Waller, Goldman Sachs has sharply lowered its year-end 2026 gold target price from $5,400 per troy ounce to $4,900, classifying its recent strategy as ‘tactically cautious’. It also warns that if rate hikes become reality, gold could fall further to $4,440 per ounce.

In a report released on June 18, Goldman’s commodities research team listed two main reasons for the target price cut: First, its economists had already postponed the last two expected Fed rate cuts to 2027 earlier this month, implying no rate cuts will happen in 2026, significantly dampening the outlook for rate-sensitive gold ETF demand. Second, the first FOMC meeting chaired by Waller sent unexpectedly hawkish signals, easing market concerns over developed market central bank independence, and making gold less appealing as a macro policy hedge than previously expected.

For near-term downside risk, Goldman gave specific stress-test estimates: if the Fed implements two rate hikes this autumn, and the net selling pressure from holders of rate-sensitive ETFs is compounded by fading macro hedging demand, the gold price could fall to $4,440 per ounce by year-end—nearly $500 below the baseline forecast. The report pointed out that continued central bank gold purchases will provide some buffer, so even in this pessimistic scenario, prices would remain slightly above current levels.

Nevertheless, Goldman maintains a constructive medium- to long-term view on gold. The report sees developments in Iran and geopolitical risks involving Greenland, Venezuela, and other regions as factors that could ultimately speed up diversification into gold by the private sector, with the potential for medium-term prices to break well above $6,000 per ounce.

Delayed rate cuts and hawkish guidance combine to trigger target price cuts

Goldman analysts Lina Thomas and Daan Struyven detailed the core logic behind the target revision in the report.

First, changes in the interest rate path directly suppress demand for gold ETFs. Goldman economists recently pushed back the last two expected Fed rate cuts to June and December 2027, clearly later than the previous expectation (December 2026 and March 2027). Since some gold ETF allocations are highly correlated to the federal funds rate, the deferred window for rate cuts has pressured demand expectations.

Second, the first hawkish FOMC meeting led by Waller exceeded market expectations. Goldman believes this signal will over the next several quarters limit market concerns over developed market central bank independence, and thus reduce gold’s appeal as a macro hedge. Previously, Goldman anticipated this demand would gradually recover to early 2026 levels, but now expects it to remain basically flat.

The report also notes that Jerome Powell remains an FOMC member and that, should the Democrats win the Senate in the midterms—prediction markets put the probability at close to 50%—any new FOMC nominees would require Senate approval by the Democrat-controlled Senate, which somewhat moderates market fears of more extreme risks to central bank independence.

Near-term downside risk: Gold could fall to $4,440 if rates rise

Goldman maintains tactical caution on near-term gold prices and has explicitly quantified tail risks on the downside.

The report notes that while previous excess positions and call option demand have mostly been digested, Waller’s initial hawkish stance may still trigger a further retreat in macro hedging demand. In Goldman U.S. economists’ baseline scenario, rate hikes are not included, but if rate hikes do occur—especially if markets view them as exceeding what data can justify—macro hedge demand for gold will decline more sharply and persistently.

In such a scenario (assuming two rate hikes by autumn 2026), together with net selling pressure from rate-sensitive ETF holders, Goldman estimates prices could fall to $4,440 per ounce by year-end, about 9% below the baseline forecast of $4,900. Continued central bank gold buying would provide some buffer, so this level is still slightly above current prices.

Central bank gold buying remains a structurally solid support for gold prices

Despite tactical caution, Goldman’s structural outlook for gold remains positive, with its main support coming from the ongoing trend of central bank gold diversification globally.

Goldman’s latest estimates show that in April 2026, global central bank gold purchases (unadjusted for seasonality) were roughly 59 tonnes, of which China accounted for about 24 tonnes. Based on 3-month (seasonally adjusted) and 12-month moving averages, the current pace is about 50 tonnes per month—down from 67 tonnes per month in 2024, but still far above the pre-Russian-asset-freeze pace of 17 tonnes per month in 2022.

World Gold Council survey data confirm this trend: among 76 central banks surveyed from February to May this year, as many as 45% expect to add to their gold reserves in the next 12 months, a record high; about 90% expect overall global reserves to increase, with the rest expecting them to remain roughly stable. Based on this, Goldman assumes global central bank purchases will remain at 50 tonnes per month through 2026 and fall to 40 tonnes per month in 2027, contributing about 9 percentage points to the year-end 2026 gold price forecast.

Medium-term upside: Geopolitical risk could push gold past $6,000

In the medium term, Goldman continues to see upside risks to its gold price forecast.

The report notes that gold allocations in private investment portfolios remain low and have significant room to rise. The Iran situation and other geopolitical developments—including disputes over Greenland and Venezuela—could eventually accelerate private sector diversification into gold, and could also increase investor concern over Western fiscal sustainability, reinforcing this trend.

In an optimistic case, if macro hedge demand (i.e., gold call demand) rebounds to early 2026 levels, Goldman expects year-end prices could soar past $6,000 per ounce. In addition, current speculative positioning remains relatively low compared to historical averages, and gold ETF holdings are also below the level implied by fed funds rates; normalization of both could add about 4 percentage points to medium-term price growth.

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