Gold’s spectacular rally may have hit a speed bump, but Wall Street’s biggest banks remain convinced that the precious metal’s long-term bull market is far from over.
Goldman Sachs and Morgan Stanley have both trimmed their near-term gold price forecasts in recent weeks, reflecting a shifting interest-rate outlook in the United States and a moderation in safe-haven demand. Yet both institutions continue to project gold prices well above $5,000 an ounce over the next 12 to 18 months, underscoring their belief that the structural forces supporting bullion remain intact.
The revisions come as gold trades around $4,200-$4,300 an ounce after retreating from record highs above $5,500 reached earlier this year during the height of geopolitical tensions in the Middle East and concerns about global economic stability.
Goldman Sachs has cut its year-end 2026 gold target by $500 an ounce to $4,900, citing expectations that the US Federal Reserve will keep interest rates unchanged through much of next year. While the revised forecast still implies significant upside from current levels, it reflects growing caution over the near-term outlook.
“Our gold price views remain structurally constructive but tactically cautious, with near-term downside risk and medium-term upside risk,” Goldman Sachs analysts Lina Thomas and Daan Struyven said in a note.
The investment bank believes the most important change in the market has been the reassessment of Federal Reserve policy. The Fed left interest rates unchanged at its latest meeting, but policymakers signalled a more hawkish stance than investors had anticipated, prompting markets to scale back expectations of aggressive monetary easing.
Goldman analysts noted that concerns over central bank independence have eased following what they described as a “surprisingly hawkish” first Federal Open Market Committee meeting under Fed Chairman Kevin Warsh. The bank warned that if the Fed resumes tightening monetary policy, demand for gold as a hedge against policy uncertainty could weaken further.
In a more bearish scenario involving additional rate hikes, Goldman Sachs sees gold falling to around $4,400 an ounce by the end of the year.
Morgan Stanley has adopted a similar stance. The bank recently lowered its gold forecast to $5,200 an ounce from $5,700, reflecting delayed expectations for Federal Reserve rate cuts, rising real yields and a temporary slowdown in central-bank purchases.
Analysts at Morgan Stanley said gold’s investment narrative has evolved significantly over the past year. During the height of geopolitical tensions, bullion benefited primarily from safe-haven demand and concerns about conflict-related disruptions. Today, however, monetary policy and real interest rates are exerting greater influence on prices.
“The market has shifted from being primarily a fear trade to increasingly becoming a real-rates trade,” the bank said in its latest outlook.
Higher real yields typically reduce the appeal of gold because the metal does not generate income. As investors can earn better returns from bonds and other fixed-income assets, demand for non-yielding bullion tends to soften.
The moderation in central-bank buying has also contributed to the recent correction. Several reserve managers slowed purchases after gold surged to record highs, while some exchange-traded fund investors took profits following the sharp rally.
Despite these near-term challenges, Morgan Stanley remains firmly bullish over the medium term. The bank expects the Federal Reserve to begin easing policy in early 2027, including a series of 25-basis-point rate cuts that could reignite investor demand for bullion.
The bank also expects central banks, particularly in emerging markets, to resume reserve diversification programmes. China, India and several Middle Eastern countries have significantly increased their gold holdings in recent years as part of broader efforts to reduce dependence on the US dollar.
According to the World Gold Council, central banks have been one of the strongest pillars of support for gold prices since 2022, purchasing more than 1,000 tonnes annually for three consecutive years. The trend has reshaped the gold market, reducing its dependence on traditional investment flows and creating a more durable demand base.
Exchange-traded fund inflows are also expected to recover once interest-rate expectations begin to shift. Historically, gold-backed ETFs have attracted significant investor interest during periods of monetary easing and declining bond yields.
For investors, the message from Wall Street is becoming increasingly nuanced. The easy gains generated by geopolitical fears and aggressive central-bank buying may be fading for now, but the longer-term case for gold remains compelling.
Persistent geopolitical tensions, elevated government debt levels, ongoing reserve diversification and the prospect of future rate cuts continue to provide strong support for bullion over the coming years.
As a result, while the path higher may be less straightforward than previously anticipated, major investment banks remain united in one key view: gold’s bull market is cooling, not ending. With forecasts from Goldman Sachs and Morgan Stanley still ranging between $4,900 and $5,200 an ounce, the precious metal remains one of the most favoured long-term hedges against economic and financial uncertainty.
