Why Gold Price Could Soar Further: 2026's Major Market Drivers

Gold has experienced a stunning rally, climbing over 60% by early December 2025, and market analysts anticipate this momentum will accelerate into the new year. The reasons are straightforward: multiple powerful forces are converging to support further gains. Here’s what’s behind the surge and what investors should watch in 2026.

Geopolitical Uncertainty: The Safe-Haven Effect Persists

The combination of escalating trade disputes and regional conflicts has created an environment where investors continuously seek shelter. This dynamic proved to be the primary engine propelling gold price higher throughout 2025, and experts see no reason for it to reverse.

Institutional buyers are responding decisively. Central banks worldwide are accelerating accumulation, while exchange-traded funds tracking gold have seen substantial capital inflows. Morgan Stanley’s research team projects this pattern will intensify, with gold price potentially climbing above US$4,500 per ounce by mid-2026.

Joe Cavatoni, senior strategist at the World Gold Council, emphasizes this theme: “The metal’s exceptional performance reflects how markets are pricing geopolitical and economic risks. We expect these challenges to persist, which means continued strong buying pressure from both ETF investors and official institutions.”

The AI Correction Wildcard

A second potential catalyst gaining traction among analysts involves technology stocks—specifically artificial intelligence equities. Market observers increasingly warn that valuations in this sector have disconnected from fundamentals, creating bubble-like conditions.

Bank of America strategists identify gold as one of the most effective hedges if AI stock corrections materialize. Macquarie analysts concur, framing the choice as simple: “Those betting on tech stick with equities; risk managers buy gold as protection.”

This dynamic could trigger a meaningful rotation toward precious metals if tech valuations compress.

Monetary Policy Becoming More Accommodative

Perhaps the most structural tailwind involves anticipated shifts in Federal Reserve policy. Several factors are aligning:

The dollar weakness factor: Gold trades inversely to dollar strength. With Trump administration officials signaling preference for lower interest rates, and Jerome Powell’s term ending this year, markets anticipate a more dovish leadership. Rate cuts typically weaken the dollar and boost gold price simultaneously.

Fiscal pressure on the Fed: The U.S. deficit has reached unsustainable levels. Annual interest expense on national debt exceeds US$1.2 trillion against a US$1.8 trillion budget deficit. Financial analysts like Larry Lepard observe that Washington effectively requires lower rates to manage these fiscal challenges—a reality investors increasingly recognize.

Quantitative easing returns: The Fed has already signaled the end of quantitative tightening, with bond reinvestment resuming December 1st. As rate cuts commence and growth slows, the central bank may resort to quantitative easing—purchasing government securities to increase money supply. This policy environment historically supports precious metal valuations significantly.

Lepard’s projection encapsulates the bullish case: gold will likely test US$4,500 on its way toward US$5,000 as monetary accommodation intensifies.

The Consensus Price Targets for 2026

Financial institutions have converged around similar forecasts, reflecting widespread agreement on gold’s direction:

• Metals Focus predicts an annual average near US$4,560, with fourth-quarter strength potentially pushing prices to US$4,850
• Goldman Sachs sees potential for US$4,900 on central bank demand and inflation-driven rate cuts
• Bank of America projects the yellow metal could breach US$5,000 given deficit expansion and unconventional policy responses
• B2PRIME Group estimates US$4,500 average pricing as fiscal and monetary pressures intensify

These forecasts span a range from US$4,500 to US$5,000—a narrow consensus among major institutions.

What Investors Should Monitor

The gold price increase trajectory depends on three interconnected elements holding steady through 2026. Trade policy uncertainty must persist to keep risk premiums elevated. Tech sector valuations require pressure to redirect capital flows. Central banks and the Fed must follow through with the anticipated policy accommodation.

Should these conditions materialize, gold price could indeed reach levels that seemed impossible just years ago, rewarding investors who recognized the metal’s fundamental appeal during periods of systemic instability.