Despite this week’s stumble, gold prices could extend gains as central banks and ETFs buy in, anticipating Fed rate cuts and a weaker dollar. Morgan Stanley enlists four takeaways;
1: Gold prices, which are up nearly 50% in 2025, are likely to add more gains by the end of 2026.
2: Gold surpassed the share of U.S. Treasuries in central bank reserves for the first time since 1996, while ETFs backed by gold keep posting record inflows.
3: Higher prices could dampen demand for gold, with jewelry consumption already showing signs of weakness.
4: A super-cycle of capital investments by gold producers is unlikely, due to permitting and regulatory hurdles.
Gold broke a new record high on October 10, surpassing $4,000 per ounce for the first time, and continued to climb since then. On October 21, the rally hit a wall, with a drop of as much as 6%, the biggest daily loss in 12 years. Still, gold has surged about 50% in 2025, cementing its status as one of 2025’s top-performing assets.
The price increases are a reaction to major policy, geopolitical and economic developments this year, including tariffs, the Israel-Hamas conflict, concerns about the Federal Reserve’s independence and the U.S. government shutdown.
Morgan Stanley Research expects the rally to continue and revised its 2026 gold forecast upward to $4,400 per ounce, a significant increase from its previous estimate of $3,313. The new projection implies an additional gain of about 10% from early October to the end of next year.
“Investors are watching gold not just as a hedge against inflation, but as a barometer for everything from central bank policy to geopolitical risk,” says Morgan Stanley Metals & Mining Commodity Strategist Amy Gower. “We see further upside in gold, driven by a falling U.S. dollar, strong ETF buying, continued central bank purchases and a backdrop of uncertainty supporting demand for this safe-haven asset.”
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