Gold poised to hit $5,000 in early 2026

January 21, 2026 (MLN): Gold is set to remain in the spotlight through 2026, with prices potentially reaching $5,000 per ounce in the first half of the year, amid elevated geopolitical risks, rising fiscal deficits and expectations of a softer US dollar.

The precious metal has already recorded historic highs, climbing to $4,548/oz on 29 December 2025 and extending gains to $4,642/oz on 14 January 2026, showing sustained safe-haven demand and strong investor interest, according to HSBC’s Currency and Commodities Outlook.

Currently, Spot gold stood at $4,742.56 an ounce at 11:22 a.m. PST, based on Mettis Global data.

Attributes the rally to a powerful combination of risk-off buying, policy uncertainty and US dollar weakness.

Gold has benefited from investors seeking protection against geopolitical shocks, volatile equity markets and concerns over long-term macroeconomic stability.

While rallies may be interrupted by sharp pullbacks particularly if anticipated US interest-rate cuts fail to materialize the bank believes underlying support remains firm due to central bank buying, institutional inflows and the need for portfolio diversification.

Trading conditions are expected to be marked by high volatility and wide price ranges, with elevated long positions vulnerable to liquidation.

Geopolitical risks continue to play a decisive role in shaping gold’s trajectory.

Ongoing conflict in Ukraine, rising US-China rivalry, tensions surrounding Taiwan and instability in the Middle East, including developments involving Iran, have pushed global uncertainty to near all-time highs.

Any escalation in these areas could further lift gold prices, while a meaningful easing of tensions such as a durable peace agreement or improved diplomatic relations could temporarily weigh on bullion.

Economic policy uncertainty is also lending support to gold. Factors such as the US mid-term elections, the prospect of a new Federal Reserve chair and persistently high equity market valuations are keeping uncertainty elevated.

While trade tensions and tariff-related issues may still provide some support.

Monetary policy expectations remain a critical driver. The Federal Reserve may be finished with rate cuts in the current cycle and policy rates are expected to remain unchanged through 2026 and 2027.

Financial markets, however, continue to price in additional easing, and this anticipation has been a key factor behind gold’s recent surge.

The bank warns that if these expected cuts fail to materialize, the gold rally could falter. Nevertheless, the US dollar is expected to remain relatively soft in 2026, which should provide ongoing support for gold, even if it does not propel prices significantly higher.

Mounting fiscal deficits are emerging as an increasingly important, though less visible, support for gold.

Highlighted growing concerns over US and global government debt levels, noting that US fiscal deficits are projected to exceed $2tr in fiscal year 2026, with debt-to-GDP ratios nearing 100%.

Similar debt challenges across advanced economies are contributing to investor unease and reinforcing gold’s appeal as a long-term store of value.

Central banks remain a cornerstone of demand. After accumulating close to 1,100 tonnes of gold annually between 2022 and 2024, and slightly below that level in 2025, central banks are expected to continue buying in 2026, albeit at a slower pace due to high prices.

Diversification away from the US dollar, geopolitical considerations and sanctions risk remain ongoing drivers of official sector demand, which is still expected to remain historically high and supportive of prices.

Investor demand is also expected to stay robust, led by institutional buyers using gold for diversification and hedging purposes.

ETF inflows and net long positions on the CME remain elevated, while strong buying from Asia particularly China following regulatory relaxation allowing insurance companies to add gold to portfolios has boosted bullion demand.

At the same time, FOMO-driven inflows can amplify volatility, as such positions may exit the market as quickly as they enter.

On the physical side, high prices are eroding jewelry, coin and small-bar demand globally, reducing jewelry’s share of total demand and increasing the amount of bullion that must be absorbed by investors.

Supply is also responding to higher prices, with mine output expected to rise in 2026–27 and recycling likely to increase as holders take advantage of elevated price levels.

While these supply-demand shifts have not yet derailed the rally, warns that a slowdown in investor demand later in 2026 could leave excess physical gold weighing on prices.

Showing these dynamics, HSBC has raised its longer-term gold price forecasts, while acknowledging that the rally may lose momentum in the second half of 2026 as monetary easing expectations fade, physical demand remains weak and supply continues to grow.

Even so, the bank expects gold to remain strong for the foreseeable future, underpinned by geopolitics, fiscal concerns and sustained investor interest.

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