Investing.com -- Goldman Sachs has maintained its bullish view on gold, telling investors in a note Friday that Federal Reserve rate hikes should slow rather than derail the rally.

Analyst Lina Thomas reiterated a $5,400-an-ounce forecast for the end of 2027, even after this week's Fed hike and with economists now expecting another increase in October.

While higher rates should continue to weigh on gold through exchange-traded fund demand in the near term, she said the Fed is still likely to cut three times between September 2027 and March 2028, leaving the terminal rate unchanged.

As a result, Thomas said, "We expect the impact of tighter monetary policy to be felt primarily through a slower near-term appreciation path rather than a lower terminal gold price."

She trimmed her year-end fair value estimate to $4,650 an ounce from $4,900, still above the recent spot price of about $4,350, noting much of the tightening is already priced into ETF demand.

Thomas added that the bank continues to expect gold to "grind higher in the near term," with stronger-than-expected central bank purchases offsetting the remaining drag from higher rates.

Central bank buying remains the main structural driver, contributing nearly all of Goldman's expected 23% appreciation through end-2027, with purchases running at about 91 tonnes a month, well above the pre-2022 average of 17 tonnes.

Thomas noted that risks remain skewed to the upside, with resilient call-option demand for gold as a macro-policy hedge, but flagged greater two-sided volatility.

“Conversely, a significantly more hawkish Fed path could generate an sharper-than-usual correction,” warned Thomas.