Bank Muamalat Malaysia chief economist Mohd Afzanizam Abdul Rashid.
PETALING JAYA: Gold is closing in on another record after a historic run that has reshaped how investors think about the metal.
Spot prices were around US$4,327 an ounce as at press time yesterday, after a year in which the bullion has climbed by over 60% and notched repeated all-time highs.
The question heading into 2026 is whether this is the late stage of a blow-off move or the early innings of a longer re-pricing.
Big banks have been steadily pushing up forecasts after gold hit a record US$4,381 an ounce in October, with some projecting a move toward US$5,000 next year.
For Bank Muamalat Malaysia Bhd’s chief economist Mohd Afzanizam Abdul Rashid, the case for higher prices rests on the bond market and a renewed bid for gold as rates ease.
“Despite that, we noticed that gold prices tend to move inversely with interest rates with correlation between the 10-year US Treasury yield and gold prices at minus 76%.”
He points to a demand story that is shifting from jewellery toward investment and official-sector buying.
“We are projecting that spot gold prices could hit US$4,700 per ounce in 2026 as lower interest rates in the US along with strong demand for gold investment would continue to propel gold prices next year.”
Those flows have been showing up in the World Gold Council’s data. Investment demand jumped in the third quarter, helped by a surge in exchange-traded funds buying, while central bank purchases stayed elevated.
Even with high prices, official-sector buying hasn’t disappeared: the council said central banks added 53 tonnes in October, up 36% from the previous month.
OCBC’s foreign exchange strategist Christopher Wong sees a similar blend of cyclical and structural forces at work, but expects the ride to be less explosive than 2025’s sprint.
“We believe the gold uptrend can extend into 2026, though the pace is likely to be more measured compared with the sharp run-up of over 60% year-to-date .
“Gold is no longer being driven by a single catalyst, but by a range of structural and cyclical supports – including a Federal Reserve (Fed) easing cycle, persistent central-bank demand, and elevated geopolitical and policy uncertainty.”
On his numbers, the rally has room to run: “We project gold at US$4,600 in June 2026 and US$4,800 by end-2026.”
In markets, that “range of supports” is increasingly being described as a regime shift.
The old playbook treated gold as a short-term hedge that rallied when real yields fell and faded when the macro scare passed.
The new one treats it more like a strategic reserve asset that benefits from big-picture anxieties: swelling fiscal deficits, heavier government debt loads, and a more fractured geopolitical landscape.
That’s also why the forecasts from Wall Street have crept higher, with some analysts explicitly framing gold as a portfolio “core,” rather than a crisis add-on.
Stephen Innes, managing partner of SPI Asset Management, leans hardest into that narrative of trust, credibility and geopolitics.
“At its core, gold is responding to a credibility problem.”
He argues the rally looks less like retail froth and more like state-led accumulation that changes the market’s floor.
“This rally is not being driven by retail leverage or novelty narratives. It is being led by sovereign balance sheets, reserve managers, and long-duration capital.”
For 2026, he expects volatility but sees the macro backdrop still doing the heavy lifting: “In that framework, prices exceeding US$4,700 next year are not heroic assumptions; they are plausible extensions of current macroeconomic conditions.
In more stressful scenarios, “higher levels of over US$5,000 are entirely conceivable,” expects Innes.
Despite the upbeat market tone, the risks are clear, and they mostly run through rates and flows.
Afzanizam flags the Fed as the obvious tripwire.
“The downside risk would be the Fed decision on rates. Should the Fed become more hawkish, it could affect the gold price momentum.”
Wong says he is watching for a sharp repricing in yields if the Fed cuts less than expected, any meaningful slowdown in official-sector buying, and the double-edged nature of geopolitics – where surprise de-escalation can drain safe-haven demand just as quickly as a new flashpoint can revive it.
That leaves gold heading into 2026 with an unusual profile for a non-yielding asset: expensive by history, but still supported by buyers who aren’t purely price-sensitive.
If inflation cools enough to allow more easing, and central banks continue to diversify reserves, pullbacks may remain brief.
If the opposite happens – sticky inflation, firmer yields, and a stronger dollar – gold could finally be forced to prove whether this was a trade, or a tectonic shift.
