Goldman Sachs Sticks with $5,400 Gold Price Target Amid Tighter Monetary Policy

Goldman Sachs has maintained its target price for gold at $5,400 by the end of 2027 despite the Federal Reserve's recent rate hike. Analyst Lina Thomas believes that tighter monetary policy is likely to slow gold's rise in the short term but not halt it.

The Fed raised its base rate by 0.25 percentage points to a range of 3.75-4 per cent on September 16, and forecasts point to further hikes by the end of 2026. High interest rates are typically negative for gold as they increase bond yields, making the metal less attractive.

Goldman Sachs expects demand for exchange-traded funds investing in gold to decline due to this effect. However, central bank purchases remain a significant factor supporting the market, with around 91 tonnes per month currently being bought compared to the pre-2022 average of 17 tonnes.