Morgan Stanley expects gold to extend its rally over the next two years, projecting prices to reach $4,500 per ounce by mid-2026, supported by rising inflows into gold-backed ETFs, steady central-bank accumulation, and growing demand for real-asset hedges amid ongoing macroeconomic uncertainty.
The bank’s commodity strategists noted that ETF flows have almost fully reversed after four consecutive years of net selling, with this year’s inflows marking the strongest since 2020. They expect this trend to continue as interest rates move lower.
They added that central banks “continue to add gold to their reserves,” while jewelry demand is stabilizing, creating broad-based support for physical consumption. Analysts also said that any pullback in prices would represent an attractive buying opportunity, as investors reassess gold’s role as a hedge in an environment shaped by inflation risks and shifting macro conditions.
The bank previously emphasized that gold is its top commodity pick for 2026. And on October 22—just one day after gold recorded its largest single-day loss in 12 years—Morgan Stanley reiterated its bullish outlook, raising its 2026 price forecast to $4,400 per ounce, up from a previous estimate of $3,313.
Amy Gower, Metals & Mining Commodity Strategist at Morgan Stanley, said that investors now view gold not only as a hedge against inflation but also as “a barometer for everything from central-bank policy to geopolitical risk.” She added that a weakening U.S. dollar, strong ETF demand, ongoing central-bank purchases, and a backdrop of global uncertainty are likely to fuel additional upside.
According to Morgan Stanley Research, several key factors are sustaining the rally. For the first time since 1996, gold now represents a larger share of central-bank reserves than U.S. Treasuries, signaling growing confidence in the metal’s long-term value.
Gold-backed ETFs have also emerged as major buyers, registering a record inflow of $26 billion in the third quarter. Total assets under management climbed to an all-time high of $472 billion.
After largely remaining on the sidelines for two years, retail investors are also returning to the gold market. As expectations rise for a weaker U.S. dollar—driven by prospects of slower economic growth—many investors are shifting their safe-haven allocations away from dollar-denominated assets and into gold. A weaker dollar also makes gold more affordable for international buyers.
Furthermore, anticipated Federal Reserve rate cuts are providing an additional boost. Since the 1990s, gold prices have historically risen by an average of 6% within 60 days of the Fed beginning a rate-cutting cycle.
With all these forces aligned, Gower concluded that gold “sits at the very top of our commodity preference list for the period ahead.”
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