Goldman Sachs Sticks to Bullish Gold Forecast Amid Fed Rate Hikes
Gold prices are expected to continue their upward trend in 2027, according to Goldman Sachs analyst Lina Thomas. In a note released on Friday, Thomas reiterated the bank's bullish view on gold and maintained its forecast of $5,400 an ounce by the end of 2027. This prediction comes despite the recent Federal Reserve rate hike and expectations for another increase in October.
Thomas notes that higher interest rates should continue to weigh on gold demand through exchange-traded funds (ETFs) in the near term. However, she believes the Fed is likely to cut rates three times between September 2027 and March 2028, leaving the terminal rate unchanged. As a result, Thomas expects the impact of tighter monetary policy to be felt primarily through a slower near-term appreciation path rather than a lower terminal gold price.
The bank's forecast assumes that central bank purchases will continue to drive gold prices higher. According to Thomas, central banks are currently purchasing about 91 tonnes per month, which is significantly above the pre-2022 average of 17 tonnes. This strong demand from central banks is expected to contribute nearly all of Goldman's predicted 23% appreciation in gold prices by the end of 2027.
Risks remain skewed to the upside, with resilient call-option demand for gold as a macro-policy hedge. However, Thomas warns that a significantly more hawkish Fed path could generate an sharper-than-usual correction in gold prices.