Will gold drop after the record high? Gold price forecasts 2026 between hopes and fears

After the gold price reached unprecedented levels and surpassed $4300 per ounce in October 2025, the pressing question for investors is: Will gold actually decline in 2026? The answer is more complex than it seems, as economic data point to multiple pathways, each carrying different probabilities for the upcoming gold prices.

The Current Picture: Intermittent Rise and Natural Corrections

Gold prices in 2025 experienced noticeable fluctuations, reaching $4381 in October before retreating to $4065 by November. This slight pullback does not indicate a collapse but reflects a natural correction after a sharp rise. The annual average was around $3455 per ounce, indicating that recent jumps were driven by specific factors we will review.

Factors Supporting Continued Growth

Unstoppable Global Demand

Demand from gold ETFs (ETFs) reached record levels, with assets under management rising to $472 billion and holdings to 3838 tons, an increase of 6% from the previous period. Bloomberg data shows that about 28% of new investors in developed markets added gold to their portfolios for the first time over the past year, indicating new investment categories entering the market.

Central Banks Keep Buying

Central banks continued purchasing gold at an accelerated pace, adding 244 tons in the first quarter of 2025 alone, a rate 24% above the five-year quarterly average. China, Turkey, and India led the buyers, with the People’s Bank of China continuing its purchases for the twenty-second consecutive month, while Turkey’s reserves exceeded 600 tons. This behavior reflects a strategic desire to diversify assets away from the US dollar.

Limited Supply Supports Prices

Mine production in Q1 2025 was only 856 tons, with a slight annual increase of less than 1%, which is insufficient to meet rising demand. Additionally, recycled gold decreased by 1%, as owners of gold jewelry preferred to hold onto their assets in anticipation of further increases. Extraction costs rose to $1470 per ounce in mid-2025, the highest in a decade, limiting production expansion.

Monetary Context: Ongoing Easing

The US Federal Reserve has cut interest rates twice since December 2024, with a third cut expected in December 2025. A BlackRock report suggests the Fed might target a rate of 3.4% by the end of 2026 in a moderate scenario. This easing trend reduces the opportunity cost of holding gold as a non-yielding asset, while the dollar (has declined 7.64% from its peak at the start of the year), increasing its attractiveness to foreign investors.

Geopolitical Tensions: An Additional Catalyst

Trade conflicts between the US and China, along with Middle East tensions, have prompted investors to hedge via gold. Reuters reports that geopolitical uncertainty in 2025 increased demand by 7% annually, and concerns over energy sectors and global supplies remain.

Gold Price Forecast 2026: Possible Scenarios

Most Likely Bullish Scenario (According to Analysts)

HSBC expects gold to reach $5000 in the first half of 2026 with an average of $4600 for the year, citing ongoing geopolitical risks and rising public debt. Bank of America raised its forecast to $5000 as a potential peak with an average of $4400. Goldman Sachs adjusted its outlook to $4900 per ounce. J.P. Morgan predicted gold could reach $5055 by mid-2026.

The most consensus range among analysts spans between $4800 and $5000 as a peak, with an average between $4200 and $4800 throughout the year.

The Correction Scenario

HSBC warned that upward momentum might weaken in the second half of 2026, with potential corrections toward $4200 if investors start taking profits, but it ruled out a drop below $3800 unless a major economic shock occurs. Goldman Sachs cautioned that prices remaining above $4800 could serve as a “price credibility test,” potentially failing during some periods.

Will Gold Really Drop?

The answer: The likelihood of a significant decline is limited, but natural corrections are expected.

The World Gold Council forecasts continued central bank purchases as a key support factor until the end of 2026, especially in emerging markets trying to protect their currencies. Historically, gold has shown resilience in maintaining high levels amid rising risks.

Deutsche Bank analysts agree with J.P. Morgan that gold has entered a new price range that is difficult to break downward, thanks to a strategic shift in investor perception of gold as a long-term asset rather than just a short-term speculative tool.

Technical Analysis: Support and Resistance

Gold closed November 2025 at $4065, maintaining the main upward trend line. Critical levels:

Support: $4000 as a strong support, followed by $3800 (50% Fibonacci retracement).
Resistance: $4200 (First resistance), then $4400 and $4680.

The Relative Strength Index (RSI) is steady at 50, indicating a neutral state with no overbought or oversold conditions, while MACD remains above zero with a bullish signal. The analysis suggests continued sideways trading with a slight upward bias between $4000 and $4220 in the near term.

Middle East Outlook

In Egypt: Forecasts indicate gold could reach 522,580 Egyptian pounds per ounce, an increase of 158.46% compared to current prices.

In Saudi Arabia and the UAE: If gold hits $5000 (Optimistic Scenario), this could translate to 18,750 to 19,000 SAR and 18,375 to 19,000 AED per ounce, respectively, considering stable exchange rates.

How to Benefit from Gold Movements

Investing in gold can be done through various methods: buying physical bars and coins, investing in gold ETFs (ETFs), or purchasing shares of mining and trading companies. Traders can also speculate on gold prices via CFDs (CFDs), which offer leverage but carry high risks requiring professional risk management and deep understanding of trading mechanisms.

Summary

Despite the theoretical possibility of corrective declines, the current economic and monetary environment supports the continuation of gold’s upward trajectory in 2026. As long as real yields remain low, the dollar stays weak, and central banks continue buying, gold price is poised to test new levels close to $5000. However, this does not exclude tactical corrections that could push prices down to $4200 or $4000 before resuming the ascent. A keen market observer should monitor global monetary indicators, sovereign debt levels, and central bank moves — these are the keys to understanding gold’s future path.