Goldman Sachs has significantly reduced its gold price forecasts for 2026-2027, citing the Federal Reserve's increasingly hawkish monetary policy stance and its impact on investor demand. According to the investment bank's latest projections, end-2026 gold price target was lowered to $4,150 per ounce from $4,650, while end-2027 forecast was reduced to $4,800 per ounce from $5,400. The revised projections assume that the Fed's tighter policy stance, including an anticipated interest rate increase in December, will limit demand for gold as protection against currency depreciation and broader economic policy risks. Goldman expects investor demand for gold as a hedge against monetary and fiscal uncertainty to return toward historical averages rather than revisit the elevated levels recorded earlier in 2026.
The World Bank's latest gold forecast presents an unusual market dynamic where current prices align closely with projected levels. According to the bank's Commodity Markets Outlook released on October 28, gold is forecasted to average $4,000 per ounce in 2028. As reported by NDTV Profit, spot gold ended Friday at $4,068.71 per ounce, creating a gap of less than 2% between the forecast and current trading levels. This alignment suggests that most of the predicted decline has already occurred in the current market environment, with Goldman Sachs' revised forecasts showing similar price trajectories despite different methodologies.
Both the World Bank and Goldman Sachs attribute recent gold weakness to tighter monetary policy conditions, with gold prices falling 5% in the July-September quarter and weakening further in October. Higher government bond yields and expectations of tighter policy have reduced demand for the non-yielding asset. Goldman specifically expects demand for gold call options, which can reflect investor interest in protection against policy-related risks, to moderate. The bank compared current market conditions with 2022, when strong central bank purchases supported gold prices but higher interest rates limited investment demand. Higher borrowing costs generally reduce the attractiveness of gold because the precious metal does not generate interest income.
Despite reducing near-term forecasts, Goldman continues to view central bank demand as a significant structural driver of gold prices. The bank expects central banks to purchase approximately 60 tonnes of gold per month throughout 2026 and 2027, substantially above the average of 17 tonnes recorded before 2022. Goldman's latest estimate places current purchases at approximately 85 tonnes per month, based on a seasonally adjusted three-month average. "We retain our longer-term constructive view on structurally strong central bank demand – which drives most of the 15% price upside we forecast by end-2027," the strategists wrote. Emerging-market central banks, particularly China, continue to hold relatively low gold allocations compared with potential long-term reserve targets, while developed-market central banks have generally participated less in the recent purchasing trend.
The World Bank's forecast shows a gradual decline from current levels, with gold expected to average $4,600 per ounce in 2026 - representing a 33.6% increase over last year's average of $3,442. According to the report, prices are projected to ease 7.6% to $4,250 in 2027 and another 5.9% to $4,000 in 2028. These figures represent slight revisions from the bank's April forecast, which had projected $4,700 for 2026 and $4,300 for 2027. The current forecasts show gold prices have already fallen close to the predicted 2028 average despite the two-year decline projection and Goldman's more conservative outlook.
