Gold will hit $4,500/oz by mid-2026 on ETF, central bank demand and real-asset hedging – Morgan Stanley

The investment bank noted that after four years of net selling, ETF flows have “nearly fully reversed”, with this year’s inflows the strongest since 2020, and they expect this trend to continue as interest rates fall.

The analysts said that central banks “are still adding gold to their reserves”, while jewelry demand is stabilizing, supporting broad-based physical demand. They added that a pullback would create buying opportunities and that investors are reassessing gold’s role as a hedge amid inflation uncertainty and shifting macro risk.

Morgan Stanley said gold is its top commodity pick for the coming year.

On Oct.22, just one day after gold posted its largest daily loss in 12 years, Morgan Stanley said they still expect the gold rally to continue, and they revised their 2026 price forecast up to $4,400 per ounce, a significant increase from the previous estimate of $3,313.

“Investors are watching gold not just as a hedge against inflation, but as a barometer for everything from central bank policy to geopolitical risk,” said Morgan Stanley Metals & Mining Commodity Strategist Amy Gower.  “We see further upside in gold, driven by a falling U.S. dollar, strong ETF buying, continued central bank purchases and a backdrop of uncertainty supporting demand for this safe-haven asset.”

Morgan Stanley Research sees ongoing support for the rally coming from a number of areas.  

“For the first time since 1996, gold now accounts for a larger share of central bank reserves than U.S. Treasuries—a powerful signal of confidence in the metal’s long-term value,” they noted. “Exchange-traded funds (ETFs) have also been strong buyers of gold, signalling renewed interest from institutional investors. ETFs backed by physical gold posted a record inflow of $26 billion in the third quarter. Their total assets under management ended the quarter at $472 billion, also a record.”

And after two years spent largely on the sidelines, retail investors are also joining the gold rush.

“As markets expect the U.S. dollar to weaken on prospects of slower growth in the world’s largest economy, many investors are shifting their safe-haven portfolios, moving from dollar-denominated assets to gold,” the analysts said. “Additionally, a weaker dollar makes gold more affordable for international buyers.”

Fed interest rate cuts are providing another boost to gold prices, with Morgan Stanley noting that since the 1990s, gold prices have averaged a 6% increase in the 60 days following the start of a Fed rate-cutting cycle.

“With all these factors, it probably comes as no surprise that gold is right up at the top of our order of preference among commodities,” Gower said.