Goldman Sachs lowered its year-end gold forecast by $500 an ounce, citing expectations that the US Federal Reserve will not cut interest rates this year.
The revised target puts the price of gold at $4,900, down from the previous estimate of $5,400. This is based on the assumption that the Fed’s next rate cut could be delayed to March 2027 and December 2027.
“Our view on gold prices remains structurally constructive, but tactically cautious, with near-term downside risks and medium-term upside risks,” Goldman Sachs commodity analysts Lina Thomas and Daan Struiven said, according to Bloomberg.
A delay in lowering interest rates in the US could also weigh on cryptocurrencies, as lower interest rates tend to favor digital assets such as Bitcoin. The war in Iran also damaged assets.
Bitcoin has fallen 28.3% since January, and gold has fallen more than 22% from January’s all-time high of $5,327 an ounce. Gold prices are currently $135 away from falling below $4,000, a level not seen since November. According to Go to Gold Price.
This is a one-year chart of gold prices. sauce: gold price
Related: Bitcoin is significantly undervalued compared to AI stocks, but Fed hawkish risks remain: Bitwise
Last week, analysts warned about Bitcoin and gold. May face further headwinds This year, coupled with the Middle East conflict, this comes after the US consumer price index rose at an annual rate of 4.2% in May.
Gold has no yield, so rising interest rates could mean holding gold becomes more expensive compared to bonds or cash, and the market may be reevaluating the whole “easy money” theory that drove gold to record highs earlier this year.
“Overall risk appetite will only truly reverse if inflation declines, rates can be cut, and liquidity improves along with a lower cost of capital,” Tim Sun, senior researcher at Hashkey Group, told Cointelegraph.
CME’s FedWatch Tool show Compared to the current target rate of 3.5% to 3.75%, interest rates are likely to remain unchanged or rise for the remaining months of 2026.
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