American investment bank Goldman Sachs has drastically lowered year-end gold price forecast to 4,900 U.S. dollars per ounce on the prospect that the Federal Reserve will make no interest rate cut this year.
The bank announced the adjustment in its latest report and the lowered price target was down from a previous forecast of 5,400 dollars per ounce.
The company cited the prospect of no Fed interest rate cut this year as the rationale behind the move.
Its analysts have pushed back the timeline for the Fed's next rate cut to 2027, which will directly dampen projected money inflows into gold ETFs. While Goldman Sachs still holds a bullish outlook for gold price for the remainder of the year, it now expects the price gain to be much smaller than previously anticipated.
Fed Chairman Kevin Warsh made more hawkish stance at the policy meeting held last week, easing market concerns over the Fed’s independence, but also denting demand for gold as a safe haven.
Goldman Sachs warned that if the Fed raises interest rate within this year, gold price could tumble to 4,400 dollars per ounce by the end of the year.
As of last week, international gold prices had fallen for three consecutive weeks, slipping below the threshold of 4,200 dollars per ounce, a cumulative drop of more than 20 percent from the peak of this year.
Goldman Sachs said it maintains a structural bullish stance on gold price over the medium to long term, citing persistent gold buying by central banks as a major force for supporting gold price.
Goldman Sachs lowers gold price forecast on no Fed cuts this year
