Goldman Sachs cuts gold forecast to $4,900 for 2024

Goldman Sachs has revised its year-end gold price target, reducing its forecast from $5,400 to $4,900 per ounce amid shifting expectations for the trajectory of US interest rates. This adjustment comes as the bank now expects the US Federal Reserve to postpone interest rate cuts, meaning lower rates may not come until 2027. The change arrives at a time when both gold and Bitcoin are trading below their January peaks.

Fed rate outlook reshapes gold forecasts

Commodity analysts Lina Thomas and Daan Struyven from Goldman Sachs noted that short-term downside risks remain for gold, although they see potential for gains in the medium term. According to the bank’s latest projections, the Fed could keep rates unchanged throughout 2026, with the next reductions possible in March and December 2027.

Currently, gold is trading more than 22% below its record high of $5,327 reached in January. Data shows gold is just $135 above the $4,000 level. Persistently high interest rates tend to dampen demand for non-yielding assets like gold, often pushing investors toward bonds or cash equivalents instead.

Markets had previously anticipated an earlier easing move from the Fed. However, persistent inflation data has pushed these expectations further into the future. The updated guidance suggests gold prices may continue to face short-term headwinds.

Bitcoin pressured by prolonged tight monetary policy

The shift in rate expectations is affecting not just gold but also digital assets. Bitcoin has declined by 28.3% since January. As markets price in the likelihood of higher rates for longer, risk appetite has dwindled even in the crypto space.

Lower interest rates typically drive demand for riskier assets, including cryptocurrencies. In contrast, expectations that rates will remain elevated for an extended period weigh on investor sentiment. This period of weakness has coincided with intensifying geopolitical tensions involving Iran.

Inflation data brings new challenges for markets

Last week, analysts pointed out fresh headwinds for both gold and Bitcoin. The catalyst was the US Consumer Price Index, which rose by 4.2% on an annual basis in May. Rising inflation complicates central bank rate decisions and limits the prospect for near-term cuts.

HashKey Group operates as a leading Asia-based digital asset financial services provider. Meanwhile, CME Group’s FedWatch data reflect an expectation of stable monetary policy through the rest of 2026. Current projections indicate that rates will likely remain in the 3.5% to 3.75% range or higher for some time.

FedWatch data show little chance of rate cuts before 2027. Goldman Sachs’s downward revision for its gold forecast fits squarely within this broader monetary policy backdrop.

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