Will the price of gold drop in 2026? Predictions exceeding $5000 spark controversy

Optimistic Scenario: Towards a New All-Time High

Financial analysts paint an optimistic picture for gold prices in the coming year, with HSBC’s report indicating the potential for the precious metal to reach $5,000 per ounce in the first half of 2026, with an expected annual average of $4,600. HSBC is not alone in betting on this rise; Bank of America has issued similar forecasts targeting the same level, while Goldman Sachs has raised its estimate to $4,900, and J.P. Morgan to around $5,055 by mid-2026.

These bullish forecasts are not made in a vacuum. Gold prices in 2025 experienced an exceptional surge, surpassing $4,300 in mid-October before retreating to around $4,000 in November. This volatility itself reflects the pressures faced by the gold market between buying and selling forces.

What Drives Gold Prices Higher?

Multiple factors support this upward trend. First, strong institutional demand: total gold demand in Q2 2025 reached 1,249 tons valued at $132 billion, with gold ETF (ETFs) showing massive inflows, as assets under management rose to $472 billion with holdings of 3,838 tons, very close to the all-time peak.

Second, central bank behavior: global central banks added 244 tons in Q1 2025, and currently 44% of central banks worldwide hold gold reserves, up from 37% in 2024. China, Turkey, and India are leading this expansion, with the People’s Bank of China alone adding over 65 tons in a single period, continuing this trend for its 22nd consecutive month.

Third, supply constraints: while mine production reached a record 856 tons in Q1 2025, the increase was modest (only 1% annually) and did not keep pace with rising demand. Additionally, recycled gold decreased by 1%, as owners of gold jewelry preferred to hold onto their assets in anticipation of higher prices, deepening the supply-demand gap.

The Role of Monetary Policy and the Falling Dollar

The U.S. Federal Reserve cut interest rates (to a range of 3.75-4.00% in October 2025), and markets now anticipate an additional 25 basis point cut in December 2025. According to BlackRock estimates, rate cuts could bring the interest rate down to around 3.4% by the end of 2026.

This easing trend weakens real bond yields, reducing the opportunity cost of holding gold (an interest-free asset). Meanwhile, the (dollar index) has declined by approximately 7.64% from the start of the year through November 2025, while 10-year U.S. Treasury yields fell from 4.6% to 4.07%. This dual decline enhances gold’s appeal to foreign investors.

Other Factors: Debt and Geopolitical Tensions

Concerns over global sovereign debt have intensified, with the international debt exceeding 100% of GDP according to IMF data, prompting 42% of major hedge funds to increase their gold holdings during Q3 2025.

On the geopolitical front, trade conflicts and regional tensions have boosted gold demand by 7% annually, pushing prices above $3,400 in July and then to $4,300 in October.

Bearish Scenario: Will Prices Really Fall?

Despite optimism, analysts warn of potential correction risks. HSBC pointed out that upward momentum could weaken in the second half of 2026, with a correction toward $4,200 possible if investors start taking profits. However, they excluded a drop below $3,800 unless a major economic shock occurs.

Goldman Sachs warned that sustained prices above $4,800 could lead to a “price credibility test,” meaning a challenge to its ability to maintain high levels amid weak industrial demand. Conversely, J.P. Morgan and Deutsche Bank dismiss this scenario, considering that gold has entered a new price zone that is difficult to break downward, thanks to a strategic shift in investor perception of it as a long-term asset rather than just a short-term speculative tool.

Technical Analysis: Neutrality and Waiting Signals

On the daily chart, gold closed on November 21, 2025, at $4,065 per ounce after touching a peak of $4,381 on October 20. The price broke below the ascending channel line but remains above the main short-term upward trend line around $4,050.

The Relative Strength Index RSI shows stability at the 50 level, indicating a state of complete neutrality between bearish and bullish pressures, while the MACD remains above zero, confirming the overall bullish trend. The expected scenario is for gold to trade within a range of $4,000 to $4,220 in the near term, with the overall outlook remaining positive as long as the price stays above the main trend line.

Regional Outlook

In Egypt, CoinCodex forecasts the price reaching approximately 522,580 Egyptian pounds per ounce in 2026, an increase of about 158%. In Saudi Arabia and the UAE, if gold stabilizes around $5,000, this could translate to approximately 18,750-19,000 SAR and 18,375-19,000 AED, respectively, noting that these forecasts depend on stable exchange rates and continued global demand.

Summary: A Plausible Scenario or a Must-Verify?

Gold price forecasts for 2026 seem to fall within two main ranges: the first targeting $4,800-$5,000 as a potential peak, and the second averaging between $4,200 and $4,800 annually. While the bullish scenario is supported by strong fundamentals weak dollar, easing monetary policies, high institutional demand, and geopolitical concerns, a correction of $200-$300 is not unlikely if investors start taking profits.

The real question is: Will gold prices fall in 2026? There is no definitive yes or no answer; it depends on inflation stability, labor market responses, and fiscal policy developments. However, the prevailing bias remains toward continued upward movement, provided real yields stay low and the dollar remains weak.