Forecasting the gold trajectory for the coming year.. Will it break the $5000 barrier?

In 2025, the precious metal experienced significant developments worth considering, with prices reaching a peak of $4300 per ounce in mid-October before retreating to around $4000 in November. These fluctuations raise a fundamental question: can gold break the psychological level of $5000 in the first half of 2026? The answer requires understanding the market drivers at global and regional levels.

Key Drivers for Gold’s Rise

Institutional Demand Reaches Unprecedented Levels

Data from the World Gold Council reveal a clear pattern: total demand in Q2 2025 was approximately 1249 tons, up 3% annually, while value surged to $132 billion, a 45% increase. Exchange-traded gold funds achieved massive inflows, managing assets worth $472 billion, with holdings of 3838 tons, a 6% increase from the previous period, approaching a record high of 3929 tons.

North America led the regions with a demand of 345.7 tons, followed by Europe with 148.4 tons and Asia with 117.8 tons. Individual investors showed increased interest, with about 28% of new investors in developed markets adding the metal to their portfolios for the first time, reflecting a shifting investment pattern toward safe assets.

Central Banks Accelerate Their Reserves

Central banks added 244 tons in Q1 2025, exceeding the five-year quarterly average by 24%. Currently, 44% of global central banks hold gold reserves, up from 37% in 2024, indicating a global strategy to diversify reserves away from dollar concentration.

China led buyers with over 65 tons added, continuing its expansion for the 22nd consecutive month, while Turkey increased its reserves above 600 tons. This trend is expected to continue until the end of 2026, especially in emerging markets seeking to protect their currencies from exchange rate volatility.

Limited Supply Meets Rising Demand

Although mine production hit a record 856 tons in Q1 2025 (up 1% annually), this is insufficient to meet the accelerating demand. Recycled gold declined 1% during the same period, as stockholders preferred to hold onto their reserves amid bullish outlooks. Global extraction costs rose to $1470 per ounce in mid-2025, the highest in a decade, constraining production expansion and deepening relative scarcity.

Monetary and Political Factors

Interest Rate Cuts Open the Door for Upside

The US Federal Reserve cut interest rates by 25 basis points in October 2025 to a range of 3.75-4.00%, marking the second cut since December 2024. Markets are pricing in an additional 25 basis point cut in December 2025, making it the third rate reduction this year. This path enhances gold’s appeal as a hedge against declining real yields.

BlackRock projects interest rates reaching 3.4% by the end of 2026 in a moderate scenario, reducing the opportunity cost of non-yielding assets like gold.

Double Weakness of the Dollar and Yields

The dollar index declined 7.64% from its peak at the start of the year until November 21, 2025, influenced by rate cut expectations and slowing growth. US 10-year bond yields fell from 4.6% in Q1 to 4.07% on November 21. This double decline boosted institutional demand for the metal and helped portfolios rebalance away from dollar assets.

Geopolitical Risks Ignite Defensive Demand

Trade tensions between Washington and Beijing, along with tensions in the Middle East and Taiwan, increased safe-haven demand by 7% annually, according to Reuters. When tensions escalated in July 2025, spot prices jumped to $3400, and with ongoing uncertainty, surpassed $4300 in October.

Sovereign Debt and Persistent Inflation

The World Bank and IMF indicate that global public debt has exceeded 100% of GDP, raising concerns about fiscal sustainability. This reality prompted 42% of major hedge funds to increase their gold holdings in Q3 2025. The metal is increasingly viewed as an effective hedge against loss of purchasing power in an environment where inflation remains a concern.

2026 Outlook from Major Financial Institutions

Most Optimistic Range

HSBC expects a rally reaching $5000 per ounce in the first half of 2026, with an average of $4600, compared to $3455 in 2025.

Bank of America raised its forecast to $5000 as a potential peak with an average of $4400, but warns of short-term corrections.

Goldman Sachs adjusted its estimate to $4900, citing ETF inflows and continued central bank buying.

J.P. Morgan projected $5055 by mid-2026.

Consensus

The most common range among analysts is between $4800 and $5000 as a potential peak, with an average between $4200 and $4800 for the full year.

Regional Projections

In Egypt: CoinCodex forecasts suggest the price could reach approximately 522,580 EGP per ounce, a 158.46% increase over current prices.

In Saudi Arabia and UAE: If we translate the ambitious scenario ($5000 per ounce) at fixed exchange rates, we might see levels near 18,750-19,000 SAR and 18,375-19,000 AED per ounce respectively.

These projections remain contingent on stable exchange rates, sustained global demand, and no major economic shocks.

The Downside Scenario… Cautious Possibilities

Despite overall optimism, HSBC warns of potential loss of momentum in H2 2026, with corrections possibly down to $4200 if investors take profits, excluding a drop below $3800 unless a severe economic shock occurs.

Goldman Sachs warned that prices staying above $4800 could face a “price credibility test,” especially with weak industrial demand.

However, J.P. Morgan and Deutsche Bank analysts agree that gold has entered a new price zone that is difficult to break downward, thanks to strategic shifts viewing it as a long-term asset rather than just a speculative tool.

Technical Price Movement Monitoring

On November 21, 2025, gold closed at $4065.01 per ounce after touching a high of $4381.44 on October 20. It broke a daily upward channel but maintains the main uptrend line connecting lows around $4050.

The key support level at $4000 is critical: a break below could lead toward $3800 (50% Fibonacci retracement), but a rebound from there opens the way toward $4200 and above.

The Relative Strength Index (RSI) stands at 50, indicating neutrality with no clear bias. The MACD remains above zero, confirming the ongoing bullish trend. The outlook: sideways trading leaning upward between $4000 and $4220 soon, with a positive bias as long as prices stay above the main trend line.

Summary: What Next After 2025?

Gold price forecasts for 2026 reflect a struggle between institutional buying and risk hedging on one side, and short-term corrections on the other. With declining real yields, a weakening dollar, and ongoing geopolitical concerns, gold appears poised to reach new historic highs.

The key point: if accommodative monetary policies and central bank demand persist, $5000 is not an unrealistic dream. Conversely, if market confidence returns and inflation subsides, gold may enter a longer stabilization phase, potentially preventing these levels from being reached.

Investors should closely monitor: Federal Reserve decisions, global monetary policies, inflation data, and geopolitical developments. These are the true determinants of the precious metal’s trajectory in the coming year.