Gold commodity analysts at French bank Societe Generale SA say it is "increasingly inevitable" that the gold price will reach US$5,000 per ounce by the end of next year.
In September, Societe Generale was predicting the gold price to reach US$4,300 per ounce by the end of 2026.
But ongoing strong central bank purchasing and massive new investment flows into gold exchange-traded funds (ETFs) have warranted a revision, amid the gold price reaching an all-time record of US$4,379.60 per ounce last week.
In a new research note, the analysts said (courtesy Kitco News):
With ETF flows remaining strong, central bank buying expected to be resilient, we feel confident and compelled to update our target prices for gold.
We now see prices reaching $5000/oz by the end of 2026, as the rate of [ETF] flows has surpassed our initial assumptions.
Despite having no clarity on positioning (flows) of hedge funds, we have observed what can only be described as extremely strong, admittedly higher than we forecasted, positive ETF flows in the last few weeks.
Image source: Getty Images
Gold price to reach US$5,000 per ounce (or higher)
Societe Generale added that their new target for the gold price has upside risk, commenting:
Recognizing our conservative assumptions on ETF and central bank flows, we view the upside risk to our forecast is significantly greater than the downside.
The analysts said global economic uncertainty, largely brought about by US President Donald Trump's trade tariffs and unpredictable policy moves, is encouraging strong gold purchasing.
President Trump has introduced widespread tariffs, which have disrupted global trading, and US-China trade tensions are increasing.
Additionally, the US Government remains shut down, US debt is high, and a weakening US jobs market has investors nearly fully pricing in a 0.25% rate cut in October, and likely another one in December.
Societe Generale analysts said:
Why is this increase in [ETF] flows happening now?
We have previously noted a strong relationship between ETF flows and uncertainty levels since the Trump victory in November 2024 and believe for now, this to be a critical factor in understanding part of the price action.
Central banks are driving the gold price boom
Goldman Sachs says central banks around the world have increased their gold purchasing five-fold since 2022.
Goldman analyst Lina Thomas said this will continue because it represents a structural change in the way central banks manage their reserves. They are diversifying away from the US dollar and Thomas says "we do not expect a near-term reversal".
Central banks in emerging markets, including China, have not bought gold as aggressively as Western nations, and they'll seek to catch up.
Thomas said:
Our rationale is that emerging market central banks remain significantly underweight gold compared to their developed market counterparts and are gradually increasing allocations as part of a broader diversification strategy.
Goldman Sachs estimates that China holds less than 10% of its reserves in gold compared to 70% for the US, Germany, France, and Italy.
A recent World Gold Council survey found 95% of central banks expect global gold stockpiles to increase over the next 12 months.
Additionally, 43% said they plan to increase their own gold reserves — the highest percentage since the survey started in 2018.
Are investors irrationally exuberant?
Institutional and retail investors continue to pile into ASX 200 gold shares and ASX gold ETFs.
Large inflows into global gold ETFs last month prompted Goldman Sachs to substantially raise its short-term forecast for the gold price.
Goldman Sachs is now tipping the gold price to reach US$4,900 per ounce by December 2026.
Demonstrating the popularity of gold ETFs worldwide last month, an ASX gold ETF was the highest riser among the hundreds of ETFs trading on the market last month, with its unit price soaring 23%.
Last week, the top four ASX 200 gold shares by market capitalisation all reached new record highs.
They are Northern Star Resources Ltd (ASX: NST) at $26.52 per share, Evolution Mining Ltd (ASX: EVN) at $12.04, Newmont Corporation CDI (ASX: NEM) at $152.72, and Genesis Minerals Ltd (ASX: GMD) at $7.17.
Far East Capital, a mining investment advisory firm, says "We are going through a "golden period" of historic proportions."
In an article published by Listcorp, Far East Capital commented:
It is probably too late to be buying many stocks right now as they have run so hard. You need to see if the upward momentum is maintainable into the new week but many stocks could fall by 10-20% or more in that period of deliberation.
Given such amazing increases in such a short time frame, logic will tell you that there will inevitably be some profit taking, soon.
However, if the gold price remains above US$4,000/ oz, you could even see more money being sucked into the market.
Non-investors are also capitalising on the scorching gold price.
As we reported, some are selling their gold jewellery, whilst others are lining up to buy gold bars from city dealers in their lunch hour.
