Gold’s rally to $5,000 in 2026 will outperform U.S. dollar and bonds - Société Générale
Gold will continue to outperform U.S. bonds and the greenback through 2026, which is why one major bank is maintaining its maximum allocation and recommends that investors buy the precious metal on dips.
Ahead of the new year, market analysts at Société Générale said they are maintaining a 10% allocation to gold in their multi-asset portfolio. The French bank is holding its gold allocation steady as it reduces its exposure to U.S. inflation-linked bonds to zero and cuts its corporate bond holdings by half, to 5%.
“In a year when fixed income has struggled and USD weakness has weighed on the common-currency return of USD assets, SGMAP has performed well with balanced allocation. Our theme of broadening in asset price performance is reflected in the performance of various equity markets and other assets like gold,” the analysts said in their latest report. “Going forward, we expect this broadening theme to persist amid falling interest rates in the US.”
The analysts reiterated their call for gold prices to hit $5,000 an ounce by the end of next year.
Outlook 2026
“Retail investors have continued to diversify their assets and pile into gold, through bars, coins and ETFs. We recommend buying the dips as non-aligned central banks will continue to diversify away from USD assets and because gold offers efficient protection against many risks (including a more dovish Fed after the change in top personnel),” the analysts said.
The analysts are maintaining their bullish outlook on gold as they expect the Federal Reserve to implement aggressive, dovish U.S. monetary policy. SocGen said it expects inflation pressures to ease next year; however, it also sees growing risks in the U.S. labor market.
“Despite the recent drop in the federal funds rate from 5.5% to 4%, the real fed funds rates remain elevated. This indicates that monetary conditions are still relatively restrictive when adjusted for inflation. Our economists anticipate an additional 50bp of cuts by April next year, broadly in line with current market expectations. If this were to materialise, it would bring policy closer to neutral, supporting a gradual easing in financial conditions,” the analysts said. “Ultimately, the Federal Reserve’s dual mandate—balancing inflation and employment—combined with the political imperative to manage food prices ahead of elections, should act as a strong anchor on policy rates through 2026. These dynamics strengthen the case for a cautious approach to monetary tightening and increase the likelihood of further easing if growth headwinds intensify.”
Along with its expected capital gains, SocGen also sees value in gold as a portfolio diversifier, as the correlation between U.S. equity markets and bonds remains above historical norms.
