The textbook response to a Federal Reserve rate hike is simple enough: bond yields climb, the dollar strengthens, and gold, which pays no interest to holders, becomes less attractive by comparison.
That is exactly what happened, and yet one of Wall Street’s biggest banks is telling clients not to abandon the trade just yet.
Goldman Sachs has spent more than a year defending its bullish gold call through rate cuts, rate hikes, and everything happening in between. Its latest note suggests the bank still believes the metal has considerably further to run, even with the Fed working directly against it in the near term.
Goldman maintains gold price target for 2027 after Fed rate hike
Goldman Sachs maintained its bullish view on gold in a note published on Sept. 18, telling investors that Federal Reserve rate hikes should slow the rally rather than derail it entirely, according to Investing.com. The note followed the Sept. 16 Fed decision, with Goldman economists now expecting another rate increase in October.
Analyst Lina Thomas reiterated the bank’s $5,400-per-ounce forecast for the end of 2027, holding firm on the target, even as the immediate rate picture turned less favorable for gold.
She trimmed her year-end 2026 fair value estimate to $4,650 an ounce from $4,900, still comfortably above the recent spot price of roughly $4,350, while noting that much of the tightening cycle is already priced into exchange-traded fund demand.
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Thomas’ longer-term view has not shifted, despite the near-term markdown. She said the Fed is still likely to cut rates three times between September 2027 and March 2028, leaving the terminal rate unchanged from Goldman’s earlier assumptions.
That framing lines up with the bank’s broader message throughout the note. Thomas wrote that Goldman continues to expect gold to “grind higher in the near term,” arguing that stronger-than-expected central bank purchases should offset the remaining drag from higher interest rates.
Central Bank buying remains the real driver
The near-term rate noise matters far less to Goldman’s overall forecast than one structural force: central banks buying physical gold at a pace that dwarfs historical norms by a wide margin.
Purchases are running at roughly 91 tonnes a month, well above the pre-2022 average of just 17 tonnes. And Goldman credits that buying with contributing nearly all of its expected 23% price appreciation through the end of 2027.
That pattern is not new for this cycle. Goldman’s commodities team has repeatedly pointed to sustained central bank buying as the backbone of its bullish thesis, even when short-term catalysts like Fed policy or ETF flows pointed the other way.
China has been a particularly consistent buyer within that broader trend. The country’s central bank extended a streak of gold purchases to 15 consecutive months in January, and continued accumulating thereafter, reaching 22 consecutive months by August.
This is part of a wider pattern of emerging-market reserve diversification that Goldman analysts have described as a key structural driver of the rally.
Goldman has also tied part of the demand to what it calls the “debasement trade,” reflecting growing concerns among high-net-worth individuals and institutions about long-term government debt levels and monetary policy credibility eroding over time.
Those positions are structural rather than tactical, TheStreet reported, which is part of why Goldman does not expect them to unwind quickly, even as short-term rate expectations shift back and forth.
A year of shifting gold forecasts
Goldman’s price target has moved considerably over the past year. This has tracked a genuinely volatile stretch for both gold and Fed policy.
Back in October 2025, the bank was already setting its fourth-quarter 2026 gold target. That was built around expectations of three additional Fed rate cuts heading into early 2026.
The target kept climbing as the year progressed. In January, Goldman raised its target to $5,400, and by April, it was maintaining that target. It also expected Western ETF holdings to rise as the Fed eased policy with a growing debasement trade among investors worried about fiscal sustainability, according to TheStreet.
That optimism hit a wall in June, as Goldman reversed its expectation for any 2026 rate cuts. This came after stronger-than-expected economic and labor-market data, alongside a more hawkish turn in Fed commentary, pushing the bank’s own projected rate cuts out to June and December 2027 from earlier estimates of December 2026 and March 2027, as TheStreet noted.
Its recent note represents the latest adjustment in that back-and-forth: trimming the near-term 2026 estimate while holding the longer-run 2027 target steady.
This pattern is consistent with how Goldman has handled surprises throughout this cycle — adjusting the timeline without abandoning the underlying thesis.
What investors should watch next
Thomas flagged that risks to her forecast remain skewed to the upside rather than the downside. She pointed to resilient call-option demand for gold as a macro-policy hedge, suggesting that bullish options positioning could provide another source of upside if the rally continues, according to Investing.com.
That does not mean Goldman is dismissing the downside risk entirely. Thomas explicitly warned that “a significantly more hawkish Fed path could generate a sharper-than-usual correction,” flagging greater two-sided volatility ahead, even within a broadly bullish framework. This caution echoes the bank’s own base-case assumptions laid out earlier this year.
For investors watching from the sidelines, the takeaway is less about fixating on a single price target and more about tracking the same forces Goldman itself has followed all year: Fed policy surprises out of Washington, central bank purchase volumes reported through the World Gold Council, and how much of the debasement trade proves durable once interest rates eventually start falling again in earnest.
Related: Top European bank has a message for investors on gold price