Gold slumped 1.7% to $4,152.60 as the Federal Reserve's pivot towards potential rate hikes spooked investors hunting for safer returns, with Goldman Sachs subsequently cutting its year-end forecast by $500 an ounce in response.
New Fed Chairman Kevin Warsh's inaugural meeting struck a surprisingly hawkish tone, signalling the central bank may raise rates as soon as September if inflation remains elevated.
That prospect sent bullion tumbling, as higher borrowing costs make non-yielding assets like gold less attractive to investors seeking returns elsewhere.
The shift also forced Goldman to recalibrate its expectations for monetary easing. The bank now expects US rate cuts in June and December 2027, having previously pencilled them in for late 2026 and early 2027.
That pushes any meaningful relief for gold further down the calendar.
Goldman's revised year-end target of $4,900 assumes bullion still gains ground in the second half, though the bank's tone has shifted from buoyant to guarded.
Analysts described their outlook as structurally constructive but tactically cautious, with near-term downside risk.
The downside scenario is uglier: if the Fed does hike, Goldman reckons gold could fall to $4,400 by year-end as demand for bullion as a macro policy hedge unwinds more persistently.
Still, central bank demand remains supportive, with official sector purchases expected to run at 50 tons monthly this year. FTSE 100-listed Endeavour, the gold producer, fell 2.7%, caught in the broader selloff.
