According to Private Bank J.P. Morgan (J.P. Morgan Private Bank) - one of the largest banks in the US, the hot rally in gold prices could see the precious metal surpass the $5,000/ounce mark next year, driven largely by central bank purchases in emerging economies.
Mr. Alex Wolf - Head of Global focus on micro- and fixed-income Strategy at J.P. Morgan Private Bank - said in an interview that gold prices could reach 5,200 - 5,300 USD/ounce by the end of 2026, 25% higher than the current trading level.
Over the past few years, net buying by central banks has become a major driver of strong gold price increases, as policymakers seek a channel to store value and diversify reserve assets.
Gold prices hit a record high of over $4,380/ounce in October before adjusting slightly in recent weeks, but have still increased by more than 50% since the beginning of the year.
Mr. Wolf said that the proportion of gold in foreign exchange reserves of many central banks, especially in emerging markets, is still quite small, and buying activities are still expected to continue, although the pace may slow down due to gold prices increasing too quickly.
According to data from the World Gold Council (WGC), central banks have added 634 tons of gold to their reserves from the beginning of the year to the end of September. Although this figure is lower than the same period in the last three years, it is still significantly higher than the average before 2022. The WGC forecasts that the total gold purchases by central banks in the whole year of 2025 will be in the range of 750 - 900 tons.
Gold purchases by central banks over the past year have been largely led by China, in line with the goal of building a less dependent global financial order in the US. Poland, Turkey and Kazakhstan are also among the countries that have increased their national gold reserves strongly.
According to Mr. Alex Wolf, Head of Global Macro-Strategy and fixed Income at J.P. Morgan Private Bank, a major emerging market leader, is currently recording a budget surplus, with large amounts of money needing to be reinvested: A large part of this capital will still be allocated to the US dollar. Therefore, we do not think that gold is replacing the role of the dollar - but only the increasing proportion of investment in gold, due to the need to diversify assets.
J.P.'s forecast. Morgan is seen as one of Wall Street's most optimistic comments on gold, even as the precious metal fell about 6% since its historic peak on October 29.
However, many other major banks still maintain a positive view of gold's prospects. Goldman Sachs predicts gold could reach $4,900 an ounce by the fourth quarter of 2026.
Mr. Wolf also pointed to a number of other supportive drivers such as investors increasing their holdings of gold and prolonged concerns about the strength of currencies: "The holding rate of gold in investors' portfolios is still relatively small."
As long as this ratio increases to about 5%, the market will see significant additional demand and the possibility of prices continuing to rise, he said.
