Analysis of precious metals: Is gold approaching new highs in 2026?

What Happened to Precious Metals Prices in 2025?

The yellow metal experienced a remarkable performance throughout the current year, rising from an average of $3455 per ounce to unprecedented levels, surpassing the $4300 mark in mid-October, before undergoing a corrective decline near $4000 in late November. These fluctuations have raised widespread questions about the upcoming trend and whether we will see a break above $5000 next year.

Factors Driving the Rise: More Than Just a Weak Dollar

The surge in the precious metal’s price was not coincidental but resulted from the convergence of several strong factors. First, investment demand exploded unexpectedly, with total demand in Q2 2025 reaching 1249 tons, a 3% annual increase, but valued at $132 billion, up 45% compared to the previous year.

Meanwhile, specialized ETFs experienced unprecedented inflows, with assets under management rising to $472 billion and holdings reaching 3838 tons, very close to the all-time peak of 3929 tons.

On the institutional level, central bank purchases increased by 24% above the five-year average, adding 244 tons in the first quarter alone. China added over 65 tons, continuing its buying spree for the twenty-second consecutive month, while Turkey’s reserves exceeded 600 tons.

Supply Bottlenecks Boost Price Outlook

Although production hit a record high of 856 tons in Q1, this slow growth of only 1% was insufficient to bridge the gap between rampant demand and limited supply. More importantly, recycling quantities decreased by 1%, as holders prefer to hold their positions rather than sell amid strong bullish expectations.

Extraction costs also rose to record levels of around $1470 per ounce, the highest in a decade, limiting production expansion and maintaining pressure on the supply side.

Monetary Policy: Divided but Tilted Toward Easing

The US Federal Reserve cut interest rates to 3.75-4.00% in October, the second cut this year. Market expectations point to another 25 basis point cut in December 2025, potentially bringing the rate to 3.50% or lower by the end of 2026, according to some analysts’ forecasts.

While the Fed began easing, the European Central Bank continued a moderate tightening policy to combat inflation, whereas the Bank of Japan maintained its accommodative stance. This divergence created a volatile environment but ultimately favored precious metals.

Dollar and Yields: Two Weaknesses Enhancing Attractiveness

The dollar index declined by about 7.64% from its peak at the start of the year, while US 10-year bond yields fell from 4.6% to 4.07%, reducing the opportunity cost of holding a non-yielding asset like precious metals.

Geopolitical Scene Spurs Safe-Haven Search

US-China trade tensions, escalating Middle East conflicts, and energy supply concerns pushed investors strongly toward gold. Reuters data showed that geopolitical uncertainty increased demand by 7% year-over-year, with major funds focusing on hedging emerging market risks.

What Do Major Analysts Say About 2026?

HSBC: expects prices to reach $5000 in the first half of 2026, with an average of $4600 for the entire year.

Bank of America: raised its forecast to $5000 as a potential peak with an average of $4400, but warns of possible short-term corrections.

Goldman Sachs: adjusted its forecast to $4900 per ounce, citing strong ETF inflows and ongoing central bank purchases.

J.P. Morgan: expects an average of $3675 in Q4 2025, with a possible peak of $5055 by mid-2026.

The most consistent range among these forecasts is between $4800 and $5000 as a peak, with an annual average between $4200 and $4800.

Technical Analysis Signals: Temporary Neutrality Before a New Move

The closing on Friday, November 21, registered at $4065, after touching a high of $4381 on October 20. The price broke the upward channel line but maintains the main upward trendline around $4050.

Strong support appears at $4000, and a break below could target $3800 (50% Fibonacci retracement). On the upside, $4200 represents the first strong resistance, followed by $4400 and $4680.

The RSI (RSI) is at 50 (completely neutral), while MACD indicates the overall bullish trend remains intact. The technical outlook suggests sideways trading between $4000 and $4220 in the near term.

Variables That Could Change the Scenario

Despite positive expectations, HSBC warned of a potential correction in the second half of 2026 that could bring prices down to $4200 if investors take profits. Goldman Sachs pointed out that prices above $4800 could face a “credibility test” regarding weak industrial sector demand.

However, J.P. Morgan and Deutsche Bank argue that gold has entered a “new price zone” that is difficult to break downward due to strategic shifts in investor perception of it as a long-term asset rather than just a speculative tool.

Regional Scenarios

In Egypt, CoinCodex forecasts suggest the price could reach around 522,580 Egyptian pounds per ounce (increase of 158.46%).

In Saudi Arabia and the UAE, if gold hits $5000, it could translate to approximately 18,750-19,000 SAR and 18,375-19,000 AED respectively (assuming exchange rates remain stable).

Summary: The Most Likely Path

Gold price forecasts for the coming days depend on a delicate balance between strong positive factors (institutional and banking demand, dollar weakness, easing policies), and potential correction risks (profit-taking, renewed market confidence).

The baseline scenario suggests a renewed attempt to break $4400 in the coming weeks, with strong chances of reaching $4800-$5000 in the first half of 2026. However, investors should be prepared for corrections down to $4000-$3800 before resuming upward movement.

Gold has remained, and will continue to be, the primary safe haven for investors in a world increasingly fraught with economic and geopolitical risks, especially with upcoming gold price forecasts indicating a strong upward trajectory.