2025 Gold's 60% Surge Sets Stage for 2026: Will Banks' $5K+ Forecasts Hold?

Gold wrapped up 2025 as one of the year’s standout performers, with prices climbing over 60% and shattering price records more than 50 times. As we enter 2026, a key question dominates market discussions: can the yellow metal maintain this extraordinary momentum, or has it finally run its course?

Wall Street’s Bullish Case: Why Major Banks Still See Upside

Despite gold’s stellar 2025 performance—its best year since 1979—investment banks remain constructive on near-term pricing. J.P. Morgan Private Bank targets $5,200–$5,300 per ounce, citing persistent demand from both institutional and central bank buyers. Goldman Sachs forecasts roughly $4,900 by end-2026, while Deutsche Bank projects a range of $3,950–$4,950, settling on a $4,450 base case. Morgan Stanley expects prices hovering near $4,500, though with likely near-term volatility.

This optimism rests on several pillars: central banks—particularly from emerging markets—continue accumulating gold at rates well above pre-pandemic levels, suggesting structural demand remains intact. Additionally, many institutional investors remain underweight to gold, pointing to potential portfolio rebalancing flows. Lower real yields and macro uncertainty continue supporting gold’s appeal as a diversification hedge in volatile markets.

What Drove 2025’s Historic Rally—and What Could Change in 2026?

Unlike previous gold rallies driven by single catalysts, 2025’s surge reflected multiple converging tailwinds. Geopolitical tensions contributed roughly 12 percentage points to gains, while a weaker U.S. dollar and declining interest rates added another 10 percentage points combined. Global economic uncertainty, central bank purchases, and positive market momentum each played meaningful roles.

Looking forward, the World Gold Council acknowledges that many 2025 tailwinds will likely persist into 2026. However, it cautions that gold now reflects what it calls the “macro consensus”—suggesting fair valuation in the near term. In its baseline scenario, the Council projects gold trading in a narrow band between –5% and +5% for 2026.

Three Wildcards That Could Reshape 2026 Outcomes

The baseline forecast assumes a steady world, but alternative scenarios could dramatically alter gold’s trajectory:

Growth Disappointment: Softer economic data combined with additional Federal Reserve rate cuts could push gold 5–15% higher, as lower real yields make non-yielding assets more attractive.

Recession Scenario: A significant economic contraction or “doom loop” could trigger aggressive monetary easing and safe-haven flows, potentially launching gold 15–30% higher—a scenario some investors view as unlikely but not impossible.

Reflation Play: If pro-growth policies successfully stimulate the U.S. economy, a stronger dollar and higher yields could work against gold, potentially dragging prices 5–20% lower from current levels.

The Real Wild Card: When Do Central Bank Purchases Pause?

Central bank gold buying remains the often-overlooked pillar supporting prices. As long as emerging market central banks continue diversifying away from dollar reserves, gold demand stays structurally underpinned. However, if this buying slows—or if recycling volumes in markets like India accelerate—gold’s near-term support could weaken.

Similarly, ETF inflow trends bear watching. While 2025 saw strong investor positioning, a reversal in flows could temporarily dampen momentum even if fundamental demand remains robust.

The Bottom Line: Solid Footing Despite Fading Tailwinds

Gold entering 2026 doesn’t feel like the early innings of a breakout, as the easy gains from macro positioning shifts may have already occurred. A repeat of 2025’s 60% surge appears unlikely given that many supportive factors are now priced in.

Yet the foundation remains firm. Central bank diversification, persistent geopolitical friction, elevated macro uncertainty, and gold’s unmatched role as a portfolio hedge continue operating in the background. Whether gold trades toward $5,300 (as J.P. Morgan suggests) or consolidates in the $4,400–$4,800 range, its strategic importance in a fragmented geopolitical environment seems unlikely to diminish anytime soon.

For traders and investors, 2026 may be about managing positioning in a narrower range rather than capturing outsized rallies—but the yellow metal’s relevance to portfolio construction hasn’t disappeared.