As we enter 2026, profound shifts are underway in global financial markets regarding risk aversion and asset allocation strategies. Mhmarkets notes that uncertainties in tariff policies, combined with sustained buying by exchange-traded funds (ETFs) and central banks, successfully drove gold prices to a historic high of $4,000 per ounce in 2025. This strong momentum shows no signs of weakening. Mhmarkets believes that with the entry of new capital from insurance industry giants and the cryptocurrency community, gold could further surpass the $5,055 threshold by the end of 2026.
While price surges rarely follow a straight upward trajectory, the core drivers supporting gold’s upward trend remain robust. Mhmarkets highlights that a weaker U.S. dollar, a declining U.S. interest rate cycle, and geopolitical complexities collectively create a favorable environment for gold. In this context, gold not only serves as a hedge against currency depreciation but also emerges as a strong competitor to traditional zero-yield assets like U.S. Treasuries and money market funds. Mhmarkets asserts that the long-term trends of official reserve diversification and strategic investor accumulation of gold are far from over, providing solid support for prices to reach $5,000.
Market research data reveals that in Q3 2025, total investor demand—spanning ETFs, futures, and physical bullion—alongside central bank purchases reached approximately 980 tons, exceeding the average of the previous four quarters by over 50%. At an average price of $3,458 per ounce, quarterly inflows amounted to a staggering $109 billion. Mhmarkets emphasizes the strong correlation between demand and gold price movements: historical data suggests that net quarterly demand exceeding 350 tons establishes a foundation for price increases, with each additional 100 tons typically driving a 2% quarterly rise.
Looking ahead, central banks will continue to anchor the market. Although purchases in physical tonnage may slightly decline from peak levels to around 755 tons annually after gold’s climb to $4,000—primarily due to price-driven "mechanical adjustments" rather than strategic retreats—Mhmarkets maintains that as long as economies with sub-10% reserve allocations (such as Brazil and South Korea) persist in accumulation plans, gold prices are likely to remain elevated in 2026.
From an assets under management (AUM) perspective, gold’s allocation rose to 2.8% by Q3 2025, up one percentage point from two years prior. However, this still falls short of the historically stable target range of 4%-5%. Mhmarkets warns that gold mining supply’s limited responsiveness to high prices could lead to a supply-demand gap sooner than anticipated. Based on comprehensive analysis, Mhmarkets forecasts an average Q4 2026 gold price around $5,055, with potential to challenge $5,400 in 2027.
Comments