Gold Nears Its Largest Annual Gain Since 1979, With Forecasts Pointing to a Break Above $5,000 in 2026

Gold is entering the final stretch of 2025 with remarkable momentum not seen in decades. The metal posted a powerful 10% surge in September — its strongest monthly performance since 2016 — followed by another 5% in October at a new all-time high, and an additional 4% in November. This brings its year-to-date gains to roughly 55%, placing gold on track for its biggest annual jump since 1979, amid projections that the metal could reach $5,000 per ounce in 2026 if supportive conditions persist.

A Global Environment Supporting the Uptrend

These gains come against a backdrop of slowing growth and elevated inflation across major economies, reinforcing a “stagflationary” environment that traditionally benefits gold. The metal is also trading near record highs against several global currencies — including the Australian dollar, British pound, euro, Indian rupee and Japanese yen — underscoring broad-based international demand.

Three Key Drivers Pushing Gold Higher into 2026

Analysts expect the upward trend to continue next year, supported by three major forces moving in tandem:

1. Central Banks Expanding Their Gold Reserves

The shift away from the US dollar has accelerated since the outbreak of the Russia–Ukraine war in 2022. Gold currently accounts for only about 20% of global reserves on average, while China’s share stands at 8%. Central banks are now aiming to raise that average to 30% as protection against rising geopolitical and financial risks.

2. Rising Holdings in Gold ETFs

Gold-backed ETFs saw a 17% increase in holdings this year, reflecting stronger interest in gold as a core portfolio diversifier. Institutions are increasingly moving toward integrating strategic commodities — such as gold, silver, copper and oil — into the traditional 60/40 investment model to hedge against inflation and currency erosion.

3. Expectations of Resumed Rate Cuts in 2026

Despite current uncertainty, the overall direction for interest rates appears to be downward. The Federal Reserve is expected to resume rate cuts in 2026, offering additional support for gold. Greater consistency in economic data releases will also provide markets with a clearer view of the Fed’s path, shifting attention back to the United States’ structural fiscal challenges.

Gold typically faces pressure when the dollar strengthens, interest rates rise, or the Federal Reserve adopts a more hawkish stance. However, the present environment — marked by sluggish growth and a lack of evidence pointing to a new tightening cycle — remains supportive for the metal.

As a result, gold is expected to stay on an upward trajectory in 2026, with the potential for new record highs if central bank buying continues and investors maintain their growing exposure to precious metals.