Precious metals on the brink of 2026.. The ongoing rise and potential risks

Record Highs in 2025 and Expectations of New Peaks

The prices of precious metals in general, and gold in particular, experienced unprecedented surges during 2025. The price broke the $4300 per ounce barrier in October before undergoing a slight correction to settle near $4000 as the year drew to a close. This strong movement sparked widespread discussions in financial circles about the possibility of reaching $5000 in 2026.

This rise occurred in a complex global context, where economic growth in major economies slowed down while easing monetary policies gradually resumed. In this environment, investors restructured their strategies and redirected their capital flows toward traditional safe-haven assets. Doubts about sovereign debt and supply chain complexities contributed to reinforcing gold’s role as a primary protective tool within major investment portfolios.

Key Factors Influencing Price Movements

Demand Reaches Historic Levels

Data from the World Gold Council showed that total demand (including investments) reached 1249 tons in Q2 2025, marking a 3% annual increase. However, the monetary value of demand exceeded expectations by 45%, reaching $132 billion.

The first quarter of the year was also exceptional, with total demand of 1206 tons, the highest since 2016. During that period, prices rose by about 38% compared to an average quarterly price of $2860 in the previous year.

Gold ETFs( experienced massive cash inflows, raising total assets under management to $472 billion. Holdings increased to 3838 tons, up 6% from the previous period, approaching the all-time peak of 3929 tons.

In North America, demand led with 345.7 tons, representing more than half of the global demand of 618.8 tons from the start of the year through September. Europe accounted for 148.4 tons and Asia for 117.8 tons.

Among individuals, interest in buying gold increased, driven by extensive media coverage and forecasts of continued rises. Private data indicated that about 28% of new investors in developed markets added gold to their portfolios for the first time.

) Central Bank Reserves Continue to Grow

Central banks worldwide continued to rapidly increase their reserves. In Q1 2025, they added 244 tons, a figure 24% above the five-year quarterly average.

The percentage of central banks holding gold reserves rose from 37% in 2024 to 44% currently. This reflects a strategic desire to diversify reserves away from reliance on the US dollar.

China, Turkey, and India topped the list of buyers. The Chinese central bank alone added over 65 tons, continuing this trend for the twenty-second consecutive month. Turkey, on its part, increased its reserves to over 600 tons.

It is expected that central bank purchases will remain the main driver of demand until the end of 2026, especially in emerging markets seeking to protect their currencies from exchange rate fluctuations.

Supply Constraints Deepen the Price Gap

Mine production reached 856 tons in Q1 2025, a modest 1% annual increase. However, this limited growth does not close the widening gap between demand and supply.

The problem was exacerbated by a 1% decline in recycled metals, as property owners preferred to hold onto their holdings, betting on continued price increases. This general apprehension significantly deepened the supply shortage.

Extraction costs rose sharply. The global average production cost hit $1470 per ounce in mid-2025, the highest in a decade. This means any expansion in production will be slow and costly.

Monetary Policies and Economic Factors

Federal Reserve Decisions

The US Federal Reserve cut interest rates by 25 basis points in October to a range of 3.75-4.00%, marking the second cut since December 2024. Statements indicated the possibility of further reductions if labor market strength wanes or growth weakens.

Some Fed governors expressed support for additional measures before the end of the year. Market expectations price in another 25 basis point cut in December, making it the third for the year.

Reports suggest the Fed may target a rate of 3.4% by the end of 2026. If these cuts materialize, they will lead to a decline in real bond yields, reducing the opportunity cost of non-yielding assets like precious metals.

Broader Global Monetary Policy

Price forecasts depend on the monetary policies of more than just the US Federal Reserve. The European Central Bank and Bank of Japan play crucial roles.

When major central banks adopt easing policies through rate cuts or bond purchases, it weakens local currencies and reduces real yields, increasing gold’s attractiveness.

Conversely, any tightening could limit demand from institutional investors seeking steady returns.

Inflation and Sovereign Debt

The World Bank estimated a 35% increase in prices in 2025, with a gradual decline expected in 2026 as inflationary pressures ease. Nonetheless, prices will remain historically high.

The International Monetary Fund warned that global public debt exceeded 100% of GDP, raising concerns about fiscal sustainability. This prompted investors to turn to metals as a hedge against loss of purchasing power.

Slowing fiscal consolidation programs in major economies, especially the US and the European Union, increased pressure on bond markets. Data showed that 42% of major hedge funds increased their positions in precious metals during Q3 2025.

Geopolitical Tensions

US-China trade conflicts and Middle East tensions prompted investors to increase exposure to safe assets. Geopolitical uncertainty boosted demand by 7% annually.

As tensions escalated around the Taiwan Strait and supply fears grew, spot prices surged above $3400 in July. With ongoing uncertainty, prices continued to rise, surpassing $4300 in October.

This historical behavior indicates that any new geopolitical shock in 2026 could push prices to record levels.

The Dollar and Real Yields

Gold moves inversely to the US dollar and real yields on government bonds. A weaker dollar increases gold’s appeal to foreign investors, while higher yields reduce its attractiveness.

In 2025, the dollar index declined by 7.64% from its peak at the start of the year until November 21. US 10-year bond yields fell from 4.6% in Q1 to 4.07% at the same time.

This dual decline boosted institutional demand for metals, as investors seek to rebalance their portfolios away from dollar-denominated assets.

Gold Price Outlook for 2026

Leading Financial Institution Forecasts

HSBC Bank expects a strong upward push reaching $5000 per ounce in the first half of 2026, with an expected annual average of $4600. This compares to an average of $3455 in 2025. The forecast is based on increasing geopolitical risks, rising global debt, and new investor demand.

Bank of America raised its forecast to $5000 as a potential peak, with an expected average of $4400. However, the bank warned of a possible short-term correction if investors start taking profits.

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

J.P. Morgan projected a price of around $5055 by mid-2026. The Q4 2025 could close near $3675.

The most common range among major analysts is between $4800 and $5000, with an average annual forecast between $4200 and $4800.

Regional Outlook in the Middle East

Middle Eastern countries saw increases in central bank reserves. The Central Bank of Egypt added one ton in Q1, while Qatar’s added 3 tons.

In Egypt, the price is expected to reach around 522,580 EGP per ounce, representing a 158.46% increase over current prices.

In Saudi Arabia, if prices approach $5000 ###at a fixed exchange rate(, it could reach approximately 18,750 to 19,000 SAR per ounce.

In the UAE, the same scenario might give an estimate of about 18,375 to 19,000 AED per ounce.

It’s important to note that these are approximate forecasts based on assumptions such as stable exchange rates and continued global demand.

Risks and Potential Corrections

HSBC warned that the upward momentum could weaken in the second half of 2026, with potential corrections toward $4200 if investors start profit-taking. However, a sharp decline below $3800 is unlikely unless a major economic shock occurs.

Goldman Sachs cautioned that sustained prices above $4800 could challenge the metal’s ability to maintain levels amid weakening industrial demand.

Analysts from J.P. Morgan and Deutsche Bank agreed 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.

Technical Analysis for Early 2026

The price closed on November 21, 2025, at $4065.01 per ounce after touching a high of $4381.44 on October 20.

The price broke below the upward channel on the daily chart but remains above the main rising trendline connecting higher lows around $4050.

Strong support appeared at $4000. A clear break below this level could target the 50% Fibonacci correction zone around $3800.

$4200 represents the first strong resistance. Breaking above could open the way toward $4400 and then $4680.

The Relative Strength Index )RSI( is steady at 50, indicating neutrality with no clear bias. The MACD remains above zero, confirming the overall bullish trend.

The technical outlook favors continued sideways trading between $4000 and $4220 in the near term, with the overall picture remaining positive as long as the price stays above the main trendline.

Summary and Future Outlook

Gold’s movement in 2025 reflects a structural shift in global investor attitudes. As the tightening cycle nears its end and the global economy enters a slowdown phase, the market faces a conflict between investors’ desire to realize profits and new buying waves from central banks and major investors.

If real yields continue to decline and the dollar remains weak, gold is poised to reach new record highs in 2026. However, if inflation eases and confidence returns to traditional financial markets, the metal may enter a long-term stabilization phase, potentially preventing it from reaching the targeted levels of $5000 per ounce.

Close monitoring of global economic and political events remains essential to understanding market dynamics and predicting future movements.