Gold Prices Surge to record Highs, Morgan stanley Predicts Continued Rally into 2026
NEW YORK – Gold reached a historic peak exceeding $4,000 per ounce on October 10, despite experiencing a significant one-day drop of up to 6 percent on October 21 – its largest daily decline in 12 years. Despite this fluctuation, gold has emerged as a top-performing asset in 2025, gaining nearly 50% in value.
Morgan Stanley has revised its 2026 gold forecast upward from $3,313 to $4,400, anticipating the current rally will persist, representing a potential 10% gain from early October levels.
The price increases are attributed to a confluence of global events, including tariffs, the conflict in Gaza, concerns regarding the Federal Reserve’s independence, and the potential for a US government shutdown.
“Investors watch gold not just as a hedge against inflation but as a barometer of everything from central bank policies to geopolitical risks,” stated morgan Stanley Strategist Amy Gower. “The uncertainty habitat, with the decline of the US dollar, strong ETF purchases and continued central bank purchases, creates more demand for gold.”
Several factors are driving the rally. Gold’s share in central bank reserves has surpassed that of US bonds for the first time since 1996, signaling strong confidence in the metal’s long-term value. Physical gold-backed ETFs saw a record $26 billion inflow in the third quarter, bringing total assets under management to a record $472 billion. Individual investors are also shifting away from dollar-denominated assets, further boosted by a weakening US dollar. Historically,gold prices have risen by an average of 6% in the 60 days following the start of a Fed interest rate cut cycle.
However, potential headwinds exist. A stronger-than-expected US dollar or a decision by the Fed to maintain current interest rates could hinder further gains.Demand may also decrease as prices rise,as evidenced by a drop in jewelry demand to its lowest level since the third quarter of 2020.
“In the second quarter, jewelry demand fell to the lowest level since the third quarter of 2020; Consumers reacted to high prices,” Gower noted.
despite these risks, Gower concluded, “considering all these factors, gold is among our top choices among commodities.”
Source: Newspaper Oxygen
