Where will the gold price go next?
The gold price entered new record territory this week as it smashed through the psychological barrier of US$4,000 an ounce. First gold futures broke through and the spot market followed mid-week.
Locally, gold danced towards the A$6,000/oz mark at the start of the week and by Wednesday was above $6,100/oz and climbing.
The meteoric rise is in the order of 55% year-to-date, and it’s been driven by a multitude of factors.
Uncertainties surrounding US president Donald Trump’s tariffs, ongoing conflict in Ukraine and Gaza, political upheaval in France, economic and unemployment worries – and the US government shutdown – have put a shine on gold’s safe-haven investment appeal. The prospect of further interest rate cuts, therefore lower yields, has added more support to the gold price.
Amid increased investor interest, global gold exchange traded funds recorded their largest inflow in September of US$17 billion, resulting in the strongest quarter on record of $26 billion, according to the World Gold Council this week.
Global gold ETFs’ total assets under management reached a new high of US$472 billion and collective holdings rose to 3,838t, just 2% shy of the 3,929t peak recorded in November 2020.
In separate market commentary, the council said gold looked overbought but remained strategically under-owned.
“While our analysis is only indicative, it leaves us confident that gold will hold its ground and perhaps see further uplift should equities experience a correction, given the plethora of supportive factors elsewhere,” the council said. “Perhaps only a major liquidity squeeze could upend both gold and equities, but there are no clear signs of fractures in credit or banking sectors…yet.”
Against this positive backdrop for investment, analysts are lifting their gold price guidance.
Goldman Sachs this week raised its forecast for December 2026 from US$4,300/oz to $4,900/oz.
It followed a report just a week earlier from Goldman Sachs Research tipping $4,000/oz by the middle of next year, driven by strong structural demand from central banks and easing from the US Federal Reserve.
However analyst Lina Thomas noted “gold is more likely to exceed our analysts’ forecasts than undershoot”.
“That said, the increase in long gold positions, a bet that prices will rise, ‘raises the risk of tactical pullbacks’ as speculators’ net bets on gold tend to revert to the mean over time,” she wrote.
The Bank of America has sounded a more bearish tone, with technical strategist Paul Ciana reportedly warning this week that the risk of correction was elevated.
Closer to home, Perth-based brokerage Argonaut last week lifted its peak gold price forecast to US$4,500/oz by the end of 2027, up from $4,000/oz.
Analysts also increased their long-term assumption by 14% to $2,500/oz.
“The upgrade to our longer-term price reflects a combination of a higher peak price, a longer duration for elevated pricing and higher inflation impacts when our long-term price commences in 2031,” analysts Hayden Bairstow and Patrick Streater wrote. Nearer-term, uncertainties remain unresolved. And the gold price rose further above $4,000/oz at the time of writing.
