Ignore short-term fluctuations? Morgan Stanley bullish on gold: this year will sprint to $4,800, risk aversion and rate cuts remain the main themes.

Driven by multiple factors including the Federal Reserve’s shift toward easing monetary policy, escalating global geopolitical risks, and continued gold purchases by central banks, Morgan Stanley has significantly raised its gold price forecast, predicting that this traditional safe-haven asset will continue to reach new historic highs in 2026, potentially surging to the $4,800 per ounce mark.

Morgan Stanley pointed out in a research report released on January 5 that gold prices are being strongly supported by macroeconomic and policy changes. These factors include the Federal Reserve’s expected easing cycle, changes in Fed leadership, and sustained buying by central banks and investment funds. Previously, spot gold had already seen a historic increase in 2025, with an annual gain of 64%, marking its strongest yearly performance since 1979.

However, on January 7, the precious metals market suffered a sharp decline and spot gold briefly fell below the $4,450/oz threshold. According to Wallstreetcn, the Bloomberg Commodity Index (BCOM) is set to launch its annual rebalancing between January 8 and 14. The market is facing liquidity shock from the "technical sell-off" pressure of passive funds, and gold faces a short-term risk of a bearish reversal.

In the long term, geopolitical uncertainty is further fueling market demand for safe-haven assets. According to a CCTV News report, at noon local time on January 3 (early morning Beijing time on January 4), U.S. President Trump and Defense Secretary Hegseth held a press conference at Mar-a-Lago in Florida regarding U.S. military action against Venezuela, controlling and extraditing Venezuelan President Maduro.

With the escalation of the Venezuelan situation—including reported U.S. military involvement and the capture of that country’s leader—not only did volatility in the energy and financial markets surge, gold prices jumped sharply again this week. Analysts believe that such unexpected events, in a market where investors are already in defensive positions, can effectively reignite safe-haven buying.

For investors, this outlook means that in an environment of declining real interest rates and a weakening dollar, gold’s opportunity cost as a non-yielding asset decreases, significantly enhancing its allocation value. Morgan Stanley particularly noted that the recent share of gold in global central bank reserves has for the first time since 1996 surpassed that of U.S. Treasury bonds. This structural change is seen as a "strong signal" of investor confidence in gold’s long-term value.

Bullish Consensus and Institutional Positioning

Wall Street’s major investment banks have reached a broad consensus on the bullish outlook for gold. Morgan Stanley has set its target for gold prices in the fourth quarter of 2026 at $4,800, a significant upward revision from its $4,400 forecast set in October 2025. The bank previously noted that investors now view gold not only as an inflation hedge but also as a barometer for central bank policy and geopolitical risk.

J.P. Morgan is equally optimistic, with an even more aggressive forecast, predicting that gold prices could reach $5,000 by the fourth quarter of 2026, and in the long run could even head towards $6,000. Natasha Kaneva, J.P. Morgan’s global head of commodities strategy, emphasized in a December 18 report that the trend driving gold’s revaluation is far from exhausted. Although the rally may not be linear, demand from central banks and investors for diversified allocations will continue to push gold prices higher amid ongoing trade uncertainty and geopolitical risks.

ING analysts also noted in a January 6 report that central bank gold purchases as well as expectations for further Fed rate cuts provide a solid foundation for rising gold prices. Alexander Zumpfe, a precious metals trader at Heraeus Metals Germany, said the Venezuelan situation, combined with existing concerns over geopolitics, energy supply, and monetary policy, further bolsters demand for safe haven assets.

Weaker Dollar and Capital Inflows

The dollar’s weakness is a key macro factor supporting the rise of gold prices. The dollar fell by about 9% in 2025, marking its worst annual performance since 2017. Morgan Stanley analyst Amy Gower pointed out that a weaker dollar, strong ETF buying, and persistent central bank purchases together provide momentum for further gains in gold prices.

Capital flow data confirms this trend. Physical gold-backed exchange-traded funds (ETFs) have recently seen record inflows, highlighting strong interest from both institutional and retail investors. Morgan Stanley noted that even non-professional buyers have joined the "gold rush," driven by expectations of a weaker dollar and a broader shift of assets away from the dollar-based system.

Silver and Base Metals Rising in Tandem

Although gold is Morgan Stanley’s top pick among commodities, the bank also highlighted the strong performance of other metals markets. Silver soared 147% in 2025, posting its strongest annual gain on record. Analysts believe that 2025 marks the peak of the structural supply deficit in silver, with new Chinese export license regulations adding to the upside risks. ING noted that supported by industrial demand (such as for solar panels and battery technology) and sustained investment inflows, silver’s outlook for 2026 remains constructive.

For base metals, Morgan Stanley is bullish on aluminum and copper, both of which face supply constraints amid rising demand. This week, copper futures on the London Metal Exchange (LME) surged to a historic high of $13,387.50 per ton, mainly driven by U.S. import demand and ongoing disruptions at mining sites. Nickel prices also hit their highest level since October 2024, largely supported by supply disruption risks in Indonesia.

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