What Does the Fed's Rate Hike Mean for Gold Prices in 2027? Goldman Sachs Explains
Goldman Sachs has maintained its bullish outlook on gold, telling investors in a note on Friday that the Federal Reserve’s recent interest rate hike should slow, rather than derail, the precious metal’s long-term rally.
The bank’s analyst, Lina Thomas, reiterated Goldman’s forecast for gold prices to reach $5,400 per troy ounce by the end of 2027, despite the Fed’s rate increase this week and growing expectations among economists for another hike in October.
While higher interest rates are expected to continue weighing on gold through exchange-traded fund (ETF) demand in the near term, Thomas said the Fed is still likely to deliver three rate cuts between September 2027 and March 2028, leaving the terminal interest rate outlook unchanged.
As a result, Goldman believes tighter monetary policy will primarily affect the pace of gold’s appreciation rather than its long-term destination.
“We expect tighter monetary policy to be reflected more through a slower pace of near-term appreciation rather than a lower terminal gold price,” Thomas said.
Goldman lowered its year-end fair value estimate for gold to $4,650 per ounce from $4,900 per ounce, although the revised target remains above the current spot price of around $4,350 per ounce. The bank noted that much of the impact from tighter monetary policy has already been priced into ETF demand.
Thomas added that Goldman continues to expect gold to “grind higher in the near term,” with stronger-than-expected central bank purchases helping offset the remaining pressure from elevated interest rates.
Central bank buying remains the key structural driver behind Goldman’s bullish gold outlook. The bank estimates that official-sector purchases account for nearly all of the projected 23% increase in gold prices through the end of 2027. Current purchases are running at approximately 91 metric tons per month, significantly above the pre-2022 average of 17 tons per month.
According to Thomas, risks remain skewed to the upside, supported by resilient demand for gold call options as a hedge against macroeconomic policy uncertainty. However, she also cautioned that price volatility could increase in both directions.
“On the other hand, a much more hawkish Fed path could trigger a sharper-than-usual correction,” Thomas warned.