The Federal Reserve has no hope of cutting interest rates this year! Goldman Sachs slashes gold target price, long-term bullish sentiment turns cautious.

Goldman Sachs recently lowered its year-end gold price forecast for 2026 by $500 per ounce, as the Federal Reserve is not expected to cut interest rates again this year. Analysts Lina Thomas and Daan Struyven stated in a report that they have lowered their December gold target price to $4900 per ounce. This means that gold prices are still expected to rise in the second half of the year, but the increase will be less than previously expected. "We maintain a constructive view on gold structurally, but remain cautious tactically, with downside risks in the short term and upside risks in the medium term," they pointed out. In recent years, the Wall Street giant has been one of the most bullish and outspoken voices in the gold market. In a series of positive forecasts, the bank previously advised investors to "boldly buy gold" at the end of 2024. They accurately predicted a significant uptrend. This downward adjustment of the gold target price indicates a slight shift in the bank's stance. Gold prices have been under pressure in recent months. The conflict in the Middle East has pushed up energy prices, reinforcing expectations of tightening monetary policy. Last week, although the Federal Reserve chose to keep interest rates unchanged, more policymakers expect rate hikes this year. Meanwhile, new Fed Chair Kevin Warsh has pledged to restore price stability. Goldman analysts stated that the main reason for lowering the gold price expectations is that with the bank's economists postponing the Fed rate cut expectations to June and December next year (previously expected for December 2026 and March 2027), the expected inflow of funds to gold exchange-traded funds (ETFs) will decrease. They also added that with the surprising hawkish stance displayed at the first Fed meeting under Warsh's leadership, concerns about the central bank's independence may ease. Warsh was appointed by President Trump, who criticized his predecessor for not cutting rates enough. Analysts also warned that if the Fed does raise rates, the demand for gold as a macro policy hedge tool may erode more persistently, and the year-end gold price could fall to $4400 per ounce. Some Goldman executives have already pointed out this possibility. Rob Kaplan, vice chairman of Goldman Sachs and former president of the Dallas Fed, stated in an interview last week that the Fed may need to raise rates as early as September if inflation remains high. However, analysts also stated that factors such as central bank gold purchases continue to support gold prices. They expect official sector gold purchases to be 50 tons per month this year and 40 tons per month next year. Last week, international gold prices fell again. As of the closing on June 19th, spot gold was at $4157.808 per ounce, down 1.45% for the week, marking the third consecutive weekly decline. After soaring to near $5600 per ounce at the end of January, gold prices have recorded three consecutive months of decline since May. This article is a reprint from "Caishen," edited by Jiang Yuanhua.