Gold around $5000.. Will it continue to rise or await a correction in 2026?

Gold Metal Tests New Historic Levels

The gold market experienced significant developments in 2025, breaking the $4300 per ounce barrier in October, then retreating back toward $4000 later. This volatility sparked widespread discussions among analysts about the price trajectory for the coming year and whether gold will continue its ascent or undergo a correction phase.

In reality, intertwined economic and political factors make precise predictions difficult, but available data suggest strong support that could push prices higher. The average price during 2025 exceeded $3455 per ounce, reflecting a notable increase compared to previous years.

Investment Demand Drives Prices Forward

Data from the World Gold Council indicate that total demand (including investment) in Q2 2025 reached 1249 tons, a 3% annual increase. In terms of value, demand surpassed $132 billion, a 45% rise.

Interestingly, Q1 recorded demand worth 1206 tons, the highest first quarter level since 2016. Gold ETFs also saw massive inflows, with assets under management rising to $472 billion and holdings to 3838 tons (up 6% from the previous quarter).

This demand approaches a historic peak of 3929 tons, suggesting that new investors view gold as a genuine investment option rather than just a temporary hedge.

Central Banks Accelerate Their Reserves

One of the key supporting factors for gold prices is the continued buying by central banks. In Q1 2025, central banks added 244 tons, a 24% increase over the five-year quarterly average.

Statistics reveal that 44% of central banks now hold gold reserves, up from 37% a year earlier. China, Turkey, and India led the buyers, with the People’s Bank of China alone adding over 65 tons.

This pattern reflects a growing desire to diversify assets and reduce reliance on the dollar, indicating that government support for gold may persist into 2026.

Supply and Demand Gap Deepens the Rally

Although mine production hit a record (856 tons in Q1 2025), the increase was modest (1% annually) and insufficient to close the gap. The issue is exacerbated by a 1% decline in recycled gold, as holders prefer to retain their assets.

The mining industry also faces rising operational costs. The global average extraction cost reached $1470 per ounce mid-2025, the highest in a decade. This limits miners’ ability to ramp up production quickly, sustaining the supply shortage.

This imbalance between strong demand and limited supply makes a significant price decline unlikely in the near term and may even open the door to higher jumps.

Monetary Policy… Gold’s Strong Ally

The Federal Reserve cut interest rates by 25 basis points in October 2025 to the range of 3.75-4.00%, the second cut since December 2024. Expectations point to further reductions before year-end and into 2026.

Reports from BlackRock suggest the Fed may target an interest rate of 3.4% by the end of 2026. If these scenarios materialize, real bond yields will decline, reducing the opportunity cost of holding non-yielding assets like gold.

European and Japanese central banks are also adopting easing policies, weakening currencies and increasing the appeal of precious metals as safe havens.

Global Debt and Inflation Support Hedging Demand

The International Monetary Fund warned that global public debt has exceeded 100% of GDP. This debt level has raised serious concerns about fiscal sustainability, prompting investors to seek safe havens.

Gold is now viewed as a reliable alternative against loss of purchasing power and sovereign debt risks. Bloomberg data show that 42% of major hedge funds increased their gold holdings during Q3 2025.

Geopolitical Tensions Boost Safe-Haven Demand

Trade tensions between the US and China and Middle East conflicts prompted investors to increase their exposure to gold. Reuters reports that geopolitical uncertainty in 2025 raised demand by 7% annually.

As fears escalated over the Taiwan Strait and energy supplies, spot prices surged to $3400 in July, then surpassed $4300 in mid-October. This behavior illustrates how gold reflects geopolitical risks, and any new crisis in 2026 could push prices to new highs.

Weak Dollar and Low Yields Play a Central Role

Historically, gold moves inversely to the dollar and real bond yields. In 2025, the dollar index declined about 7.64% from its early-year peak through November 21, influenced by rate cut expectations.

US 10-year bond yields fell from 4.6% in Q1 to 4.07% by November. This dual decline significantly supported institutional demand for gold.

Bank of America analysts believe that if this trend continues, it could support expectations for 2026, especially with real yields stabilizing around 1.2%.

Major Investment Bank Outlooks

HSBC expects gold prices to reach $5000 per ounce in the first half of 2026, with an average forecast of $4600 for the full year, compared to $3455 in 2025.

Bank of America raised its forecast to $5000 as a potential peak in 2026, with an average of $4400, but warned of a short-term correction if investors start taking profits.

Goldman Sachs adjusted its outlook to $4900 per ounce, citing stronger inflows into gold funds and continued central bank purchases.

J.P. Morgan forecasted a price around $5055 by mid-2026, with an average of $3675 in Q4 2025.

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

Price Levels in the Middle East

In Egypt, CoinCodex forecasts suggest gold could reach approximately 522,580 EGP per ounce, an increase of 158.46% compared to current levels.

In Saudi Arabia, if gold reaches $5000 as analysts expect, this would translate to about 18750 to 19000 SAR (at an exchange rate of 3.75 to 3.80 SAR per USD).

In the UAE, the same $5000 forecast (may give an estimate of around 18375 to 19000 AED per ounce.

Note that these forecasts assume stable exchange rates and continued global demand without major economic fluctuations.

Will Gold Price Drop? Possible Scenarios

Despite positive expectations, corrections are possible. HSBC warned that upward momentum might weaken in the second half of 2026, with potential correction toward $4200 if investors start profit-taking.

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

However, J.P. Morgan and Deutsche Bank agree that gold has entered a new price zone that is difficult to break downward, thanks to a strategic shift in investor perception of it as a long-term asset.

The World Bank forecasts a decline in price expectations in 2026 as inflation pressures ease, but prices will remain high compared to past years.

Technical Analysis of Future Price Levels

Gold closed trading on November 21, 2025, at $4065.01, after touching a peak of $4381.44 on October 20. The price broke below the upward channel line on the daily chart but maintains the main uptrend around $4050.

Strong support exists at $4000. A clear daily close below this level could target $3800 )50% Fibonacci retracement(.

On the resistance side, $4200 represents the first line of defense, and a breakout could open the way toward $4400 then $4680.

The Relative Strength Index )RSI( is steady at 50, indicating neutrality between selling and buying pressures. The MACD remains above zero, confirming the overall bullish trend.

The expectation is that gold will continue trading within a sideways upward-sloping range between $4000 and $4220 soon, with a positive outlook as long as it stays above the main trend line.

Summary… What Awaits Gold in 2026?

Gold’s journey in 2025 was extraordinary, but the upcoming path will depend on a delicate balance of multiple factors. As the monetary tightening cycle nears its end and the global economy enters a slowdown phase, the market will witness a struggle between investors seeking profits and new buying waves from central banks.

If real yields continue to decline and the dollar remains weak, gold is poised to break new record figures near $5000. Conversely, if inflation recedes and market confidence returns, it may enter a stabilization phase, preventing these target levels from being reached.

Overall, fundamental data lean towards optimism, supported by strong government and investment backing, with geopolitical risks remaining. This combination makes 2026 a pivotal year in the history of the gold market.