Goldman Sachs Sees Gold Reaching $5,400 by 2027 Despite Fed Rate Hikes

Goldman Sachs has reaffirmed its bullish long-term outlook for gold, projecting the precious metal will reach $5,400 per ounce by the end of 2027, according to a note released Friday. The bank's analyst, Lina Thomas, stated that anticipated Federal Reserve rate hikes are expected to slow gold's appreciation but not derail its upward trajectory.

Monetary Policy Headwinds

While higher interest rates typically create headwinds for non-yielding assets like gold, Goldman Sachs believes the impact will be concentrated in the near term. The bank anticipates that tighter monetary policy will primarily manifest as a "slower near-term appreciation path rather than a lower terminal gold price," Thomas wrote.

In light of a recent Fed rate increase and expectations for another in October, Goldman trimmed its year-end 2026 fair value estimate for gold to $4,650 an ounce from $4,900. The analyst noted that much of the expected policy tightening is already priced into demand for gold-backed exchange-traded funds (ETFs).

Central Banks Provide Structural Support

The core of Goldman's bullish thesis rests on powerful structural demand from global central banks. The note highlighted that central bank purchasing is the primary driver behind the forecast, contributing to nearly all of the expected 23% appreciation through the end of 2027.

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Key details from the report include:

• Central bank purchases are currently running at approximately 91 tonnes per month.
• This is significantly above the pre-2022 average of 17 tonnes per month.
• This strong institutional buying is expected to offset the drag from higher rates and weaker ETF demand.

Market Risks and Outlook

Goldman Sachs expects gold to "grind higher in the near term," but flagged the potential for increased two-sided volatility. While risks are skewed to the upside, supported by resilient demand for call options as a hedge against macroeconomic policy, a significant downside risk remains.

Thomas warned that "a significantly more hawkish Fed path could generate a sharper-than-usual correction." The bank's base case, however, still anticipates the Fed will implement three rate cuts between September 2027 and March 2028, leaving the terminal rate unchanged.