Goldman Sachs reversed its forecast for when gold prices will reach $3,000

Lina Thomas and Daan Struyven – analysts at Goldman Sachs believe that the US Federal Reserve’s (Fed) slowdown in interest rate cuts in 2025 could drag down demand for gold ETFs. This causes the price to only reach 2,910 USD by the end of this year and only reach 3,000 USD an ounce by mid-2026. Last year, Goldman Sachs expected precious metals to reach this mark this year.

The buying power of gold ETFs in December weakened, mainly due to the uncertain prospect of monetary easing after the US Presidential election. This makes the starting point of gold price this year also worse than expected.

“Opposing factors – reduced speculative demand and increased central bank purchasing power – are offsetting each other. This has left the precious metal stuck in a narrow range over the past few months,” analysts said. at Goldman Sachs said.

However, they believe that central bank demand is still the main driving force for gold in the long term. From now until mid-2026, Goldman Sachs forecasts that this group will buy an average of 38 tons a month.

Last year, gold prices increased by 27% and continuously reached peaks. At the end of October 2024, the price sometimes touched 2,790 USD an ounce. The market went up thanks to the Fed reducing interest rates, shelter demand and increased purchasing power from central banks.

However, the upward momentum has stalled since early November, when the victory of US President-elect Donald Trump pushed the USD price up. Recently, gold was under pressure again when Fed officials emphasized that they would be more cautious about the decision to reduce interest rates, due to inflation risks.

Economists at Goldman Sachs currently forecast the Fed to lower interest rates by 75 basis points (0.75%) this year, down from 100 basis points last year. This forecast is more optimistic than the market, because the US bank sees that inflation tends to cool down. They also believe that the Trump administration’s policy changes will not necessarily cause interest rates to rise.