Investing.com — Morgan Stanley said has hit its fourth-quarter target sooner than anticipated and sees the metal climbing above $5,000 an ounce next year, though it cautioned the path is unlikely to be smooth.
“Gold has reached our Q4 forecast of $4,450/oz faster than expected,” analyst Amy Gower wrote, adding that “we see a path to >$5,000/oz in 2027 but with scope for volatility too.”
The bank said a lower implied probability of Federal Reserve hikes has revived exchange-traded fund demand, with 70 metric tons added in July and August after 93 tons of outflows in May and June.
Morgan Stanley’s economists expect the Fed to remain on hold through 2026.
Central banks have also used softer prices to build reserves, the bank said, with China adding 60 tons so far this year, its most since 2023, and Poland adding 82 tons to take holdings to 632 tons, moving toward a 700-ton target.
Morgan Stanley flagged that gold has begun decoupling from long-term real yields, rising in early August even as long-dated yields stayed flat. The bank said the metal “appears to be pricing the fiscal concerns behind higher yields more than the yield level itself,” with reports of a stepped-up Treasury buyback plan providing further support.
Risks include upcoming U.S. inflation data and short positioning near its lowest since April 2020, leaving less room for further short covering.