Gold delivered its strongest annual performance since the 1979 oil crisis in 2025, with prices doubling over the past two years — a rally that in previous cycles might have triggered warnings of a sharp correction.
Instead, a broader and more diverse investor base, combined with powerful geopolitical and macroeconomic forces, has led analysts at JP Morgan, Bank of America and consultancy Metals Focus to project bullion prices reaching $5,000 per ounce in 2026.
Spot gold hit a record $4,381 an ounce in October, having never traded above $3,000 before March. The rally has been fuelled by sustained central bank buying and growing investor demand, with new participants ranging from corporate treasurers to stablecoin issuer Tether.
Bank of America strategist Michael Widmer said expectations of further price gains and portfolio diversification continue to drive buying interest. He pointed to persistent US fiscal deficits, efforts to rebalance the US current account, and a weak-dollar policy stance as key tailwinds.
Philip Newman, managing director at Metals Focus, highlighted additional support from concerns over US Federal Reserve independence, ongoing tariff disputes and heightened geopolitical risks, particularly the war in Ukraine and Russia’s tensions with NATO countries in Europe.
Central Banks Anchor the Cycle
For a fifth consecutive year, central banks are expected to underpin the gold market as they diversify reserves away from dollar-denominated assets. Analysts say this buying provides a structural floor, particularly when investor positioning becomes stretched and prices pull back.
“The price level is supported much higher than where you started because you get that central bank demand coming through,” said Gregory Shearer, head of base and precious metals strategy at JP Morgan.
He added that after periods of de-risking, gold has re-emerged above $4,000 in a far cleaner positioning environment, allowing the broader cycle to extend.
JP Morgan estimates that quarterly central bank and investment demand of around 350 tonnes is required to keep prices stable. For 2026, the bank forecasts average demand of 585 tonnes per quarter.
Investor allocations to gold have also risen meaningfully, with holdings now accounting for 2.8% of total assets under management, up from 1.5% before 2022. While elevated, Shearer said this does not necessarily represent a ceiling.
Price Forecasts Remain Bullish
Forecasts across major institutions remain constructive:
Morgan Stanley sees gold at $4,500 per ounce by mid-2026
JP Morgan expects average prices above $4,600 in Q2 2026 and over $5,000 in Q4
Metals Focus forecasts gold reaching $5,000 by the end of 2026
Hedging Equity Risk
The Bank for International Settlements (BIS) noted this month that the simultaneous surge in both gold and equity prices is a phenomenon not seen in at least half a century, raising questions about potential asset bubbles.
Analysts say part of this year’s gold buying has acted as a hedge against sharp equity market corrections, driven by trade tensions, geopolitical strains and the war in Ukraine. However, they caution that severe equity sell-offs can sometimes force liquidation of even safe-haven assets like gold.
Nicky Shiels, head of metals strategy at MKS PAMP, expects gold to average $4,500 in 2026, describing it as “a multi-year secular critical portfolio asset rather than a cyclical hedge”.
A More Measured Rally Ahead?
Not all analysts expect the pace of gains to match 2025. Macquarie economists argue the global environment has stabilised somewhat, forecasting a revival in growth, tapering central bank easing and relatively high real interest rates.
Macquarie projects average gold prices of $4,225 in 2026, slightly below recent spot levels.
Central bank purchases and gold ETF inflows are also expected to moderate next year, while jewellery demand — down 23% in the third quarter — remains under pressure. Retail demand for bars and coins has only partially offset this decline.
In October, long queues of retail buyers in Australia and Europe suggested a shift from jewellery into investment gold, a trend that may persist into 2026, according to Amy Gower, commodities strategist at Morgan Stanley.
Despite record prices, Metals Focus noted limited profit-taking in bars and coins. “If we do see prices start to run up again, you could well see buying into that rally as well,” Newman said.
Supply and Structural Shifts
Supply growth has remained muted, with recycling up just 6% and no meaningful central bank selling. Macquarie estimates total gold demand will rise 11% this year to 5,150 tonnes, before easing to 4,815 tonnes in 2026.
Crypto Meets Gold
Federal Reserve easing has also ushered in a new class of institutional buyers. Stablecoin giant Tether disclosed purchases of around 26 tonnes of gold in the third quarter, roughly five times the amount reported by China’s central bank over the same period.
“That’s not to be ignored,” said Morgan Stanley’s Gower, although she cautioned that broader adoption may be limited, as the US GENIUS Act does not classify gold as a reserve asset for stablecoins.
Further expansion in the investment pool could come from Asia. India has approved limited pension fund investment in gold and silver ETFs, while China allowed some insurance funds to buy gold earlier this year — although Metals Focus says buying has so far been restrained by elevated prices.
As gold transitions from a crisis hedge to a strategic portfolio anchor, analysts agree the next phase may be steadier — but the structural foundations of the bull market remain firmly in place.
