After Goldman Sachs adjusted the target price for gold, Deutsche Bank also lowered its gold price expectations for the coming quarters. The institutional judgement is shifting to caution, mainly because of the anticipated changes in the Federal Reserve policy and the resilience of the United States economic data performance, which has weakened the pre-existing support for gold.

3rd quarter synchronized with 4th quarter target downwards

According to Bloomberg, Bank of Germany analyst Michael Hsueh has revised the three-quarter gold price forecast downwards to $4300 per ounce, more than 20 per cent below the previous forecast; the target price has been revised downwards to $4,800 in the fourth quarter, a decrease of about 17 per cent. While the revised target is still higher than the current market price of approximately $4140, there has been a marked contraction in the agency ' s judgement on the back market.

Prior to this, Goldman Sachs also reduced the target price of gold at the end of 2026 from $5,400 to $4900 and expressed its recent strategy as “tactical prudence”. The two large investment houses are expected to adjust successively, reflecting a change in the market ' s judgement of the interest rate path.

The Fed is expected to be a major stressor.

Both Deutsche Bank and Goldman Sachs point to the central reason for the price of the gold to the Fed. While interest rates remained constant at recent meetings, officials released more hawk signals. The new Federal Reserve Chairman, Kevin Warsh, also stressed the restoration of price stability, which continued to cool market expectations for further easing.

Against this background, gold has accumulated a decline of more than 11 per cent since the quarter. The situation in the Middle East, which at one time pushed up energy prices, also reinforced market concerns about inflation and the tight environment and further suppressed precious metals.

Goldman Sachs economists have postponed the Fed’s last two interest rate reductions earlier this month to 2027, which means that it may not have fallen in 2026. If interest rates remain higher, the attractiveness of gold as a policy hedge may be affected.

ETF Outflow and Demand Impoverishment

In addition to interest rate factors, weak investment demand is an important basis for lower institutional expectations. According to Deutsche Bank, the continued net outflow of gold ETF suggests that traditional allocation has not returned to the market. At the same time, Chinese spot money prices depreciated against Comex futures, indicating that import demand had limited support for prices.

  • Goldman Sachs claims that if the Federal Reserve increases interest rates twice in the fall, the price of the money will drop to $4440 at the end of the year.
  • Deutsche Gin claims that if the interest rate rises three to four times, the price of the gold may fall to about $3800.

Central bank purchases still provide medium-term support.

Despite a cautious short-term judgement, neither Deutsche Gin nor Goldman Sachs has completely abandoned the medium-term view of multiple positions. Both institutions believe that continued global central bank purchases remain the most stable source of support for the gold market.

The Bank stated that the central bank demand pillar remained strong and was expected to last for some time. Goldman Sachs also believes that a central bank buy can provide a buffer against pessimism, so that the price of gold does not fall too high.

In the longer term, Goldman Sachs maintains a relatively positive judgement. In its view, the situation in Iran and the geographical changes in places such as Greenland and Venezuela still have the potential to drive the private sector to increase its gold allocation. In other words, the lower target price for this round reflects more a shift in short-term judgement than a general denial of the value of the long-term configuration of gold.