The gold rally appears to have lost some momentum, slipping back toward $4,000 per ounce. Yet even with this pullback, it’s still far outpacing not just the S&P 500 and Nasdaq, but even BTCUSD since the start of the year. The question now is whether this gap will narrow in the coming months — or widen even further.
The only thing is that the outlook isn’t straightforward.
For one, the prospects for Fed monetary easing, which had been a major driver of gold’s rise, have become more uncertain. In particular, Jerome Powell noted that future policy moves aren’t predetermined and will depend on incoming data, which is currently limited due to the government shutdown.
For example, on October 3, the U.S. Bureau of Labor Statistics didn’t release the September Employment Situation Summary, and now the Labor Department’s October employment report is also likely to be delayed. When the issue will finally be resolved and things return to normal remains unclear.
Now, if the FOMC decides to pause rate cuts at its December meeting, not only could the S&P 500 and Nasdaq slip, along with cryptocurrencies like Bitcoin and Ethereum, but the DXY index could rise, which might put pressure on gold. Another likely effect would be higher U.S. Treasury yields.
What experts say?
According to the World Bank, gold prices are expected to rise by 42% in 2025, followed by more moderate gains of 5% in 2026 and 6% in 2027, supported by continued, though slower, central bank buying and expectations of further U.S. monetary easing amid ongoing geopolitical and policy uncertainty.
- Morgan Stanley predicts that gold could potentially climb to $4,500 per ounce by mid-2026, driven by strong physical demand from ETFs and central banks amid a fragile global economic outlook.
- JPMorgan’s forecast is slightly higher at $4,573, while HSBC projects $4,600.
- Citi Research, on the other hand, takes a much more pessimistic view, predicting a drop to $3,250 per ounce.
So, who will be right in the end?
Depends on how circumstances unfold.
While central banks continue to buy gold, World Gold Council data doesn’t show any real acceleration in purchases, with figures remaining roughly in line with 2023 levels. At the same time, jewelry demand has dropped sharply, removing what was once a crucial pillar of support for the precious metal.
As for what explains the recent surge in gold prices, it is primarily driven by investor demand, fueled by expectations of easier Fed policy, concerns about the dollar’s future, and persistent inflation worries. If these factors shift, gold may continue its correction. Still, over the long term, gold has generally tended to grow.
