Gold Extends Selloff as Goldman Sachs Cuts Price Target by $500

Key Takeaways

• Goldman Sachs cut its year-end gold price target by $500 to $4,900 per ounce, citing expectations that the Federal Reserve may keep rates elevated
• Gold prices continued to decline despite ongoing geopolitical uncertainty and tensions in the Middle East
• A recent Bank of America survey showed the share of fund managers calling gold overvalued fell to its lowest level since February 2024

Gold’s price has fallen in recent days, even as tensions in the Middle East have started to ease. Investors have spent much of the year turning to gold as a safe-haven asset amid geopolitical uncertainty and expectations that the Federal Reserve would eventually lower interest rates. But Wall Street was seen adjusting its expectations for the metal.

Also Read: Mortgage Rates Slip Below 6.5% as US Housing Starts Hit Five-Year Low

Goldman Sachs Cuts Gold Target as Rate Cut Expectations Fade

Gold prices today remained under pressure after Goldman Sachs lowered its year-end target from $5,400 to $4,900 per ounce. The bank said expectations for Federal Reserve rate cuts have weakened. It has reduced one of the factors that helped support the gold market earlier this year. Meanwhile, investors still expect lower rates eventually. But the timeline has become less certain as inflation remains above the Fed’s long-term target.

Gold typically benefits from lower interest rates because it does not generate income. When yields remain high, investors have more alternatives that offer returns.

Even after lowering its forecast, Goldman Sachs remains positive on gold over the longer term. The latest Goldman Sachs gold forecast shows a more cautious view instead of a complete change in outlook. The bank said,

“Our gold price views remain structurally constructive but tactically cautious, with near-term downside risk and medium-term upside risk.”

Also Read: Intel Jumps 9% After Trump Says Apple Will Design and Build Chips in the US

Fund Managers Are Growing More Comfortable With Gold Valuations

In addition, recent survey data revealed that professional investors are becoming less concerned about gold valuation. According to Bank of America’s latest Global Fund Manager Survey, the percentage of respondents who described gold as overvalued fell to its lowest level since February 2024. Earlier this year, nearly 45% of fund managers held that view after the metal’s rally to record highs.

The survey was conducted between June 5 and June 11 and included 198 fund managers overseeing a combined $540 billion in assets.

The decline in that figure followed gold’s recent correction. While the gold price prediction remains closely tied to the path of interest rates, the latest survey indicates fewer investors believe the market has become excessively priced.

Also Read: US Debt Interest Costs Could Reach $2.5 Trillion by 2036, Burden Per Household Nears $17,000