Gold Price Rally: Is $5,000 Within Reach?

After a brief period of consolidation, the gold market has resumed its strong upward trend, targeting new historic highs. On December 22, international gold prices surged, with spot gold breaking through the $4,400/oz threshold for the first time, setting a new record and extending its year-to-date gains. In early Asian trading, spot gold climbed further to $4,484.31/oz, marking another all-time high with an intraday jump of over $40. This marks the 50th record-breaking day for gold prices this year.

Escalating geopolitical tensions, particularly in Venezuela—where the U.S. has imposed oil sanctions and increased pressure on President Nicolás Maduro’s government—have amplified gold’s safe-haven appeal.

Gold, which traded around $2,614/oz in January 2025, has rallied nearly 70% this year, on track for its strongest annual performance since 1979. Analysts at JPMorgan Chase project another 10% upside over the next year.

Traditional gold drivers—a weaker U.S. dollar, declining interest rates, and economic and geopolitical uncertainty—have fueled this rally. JPMorgan Chase highlights that tariff uncertainties, robust ETF demand, and central bank purchases pushed gold above $4,000/oz in 2025. New demand from Chinese insurers and crypto communities could propel prices to $5,055 by late 2026, with the bull market expected to persist.

Following overseas momentum, Shanghai gold futures breached ¥1,000/gram, closing at ¥1,000.86 with a 2.1% daily gain.

The Federal Reserve remains the key market driver. On December 10, the Fed delivered its third consecutive rate cut while expanding its balance sheet technically. The 25-basis-point cut faced three dissenting votes, revealing deep internal divisions over labor market cooling versus inflation control. Projections show most officials expect only one more 2026 cut, with six favoring no change, signaling higher hurdles for further easing.

November’s unexpectedly soft U.S. inflation data—2.7% YoY versus 3.1% forecast—may have been distorted by government shutdown-related methodology adjustments. JPMorgan Chase forecasts 250 tonnes of ETF inflows and 1,200+ tonnes of bar/coin demand in 2026. Central banks, strategic buyers even at record prices, are projected to purchase 755 tonnes next year.

Goldman Sachs sees 14% upside to $4,900/oz by December 2026, citing structural central bank demand and Fed rate cuts. The "currency debasement trade"—hedging against dollar weakness amid fiscal deficits and divergent global monetary policies—has gained traction.

JPMorgan Chase notes that if central banks with sub-10% gold reserves rebalance to 10%, it would require $335B ($4,000/oz) or $194B ($5,000/oz) in fresh allocations.

Despite record highs, institutional optimism remains intact, with gold’s role as a monetary anchor and portfolio diversifier underpinning long-term demand.