Gold to hit $5,000+? Sustained momentum seen in 2026

Gold prices surged dramatically in 2025, posting gains of over 40% year-to-date by September and reaching around 70% this month.

Driven by central bank purchases of the yellow metal, alongside expectations of more Fed rate cuts, spot gold prices hit $4,445.4 per ounce as of December 22, 2025 (3:22:46 AM EST) — up from early-year levels near $2,500.

The metal shattered records, peaking at $4,381 in October, marking its strongest annual performance in more than 45 years.

All told, gold prices are up more than 77% in 2025, and is on pace for its best year since 1979.

And, by this time next year, or Q4 2026, J.P. Morgan forecasts $5,055/oz average price for gold, signalling sustained momentum.

Key factors driving surge

A number of factors are at work helping drive gold prices up:

Fed rate cuts

Federal Reserve rate cuts, or even their anticipation, drive gold prices higher through fundamental economic mechanics, as seen in 2025's 77%+ surge. The core factor in this regard: lower opportunity cost.

Gold, a non-yielding asset, becomes more attractive when interest rates fall. Higher rates boost returns on bonds or savings, making gold less appealing.

Rate cuts reverse this, channeling capital into bullion. Each 0.25% Fed cut historically sparks 3-5% gold rallies, per analysts, as real yields drop (nominal rates minus inflation), CNBC reported.​

Anticipation amplifies effects

Markets price in future easing via Fed signals (FOMC minutes, dot plots). In 2025, expectations of 100bps+ cuts from 5.25-5.50% peaks fuelled preemptive buying — gold hit $3,500 by April despite steady rates initially.

Fed Chair Jerome Powell's dovish comments (e.g., softening labor data) triggered intraday spikes, with futures jumping 1-2% on cut bets, Reuters reported.​

Weakening dollar

US Dollar Index fell ~10% YTD, boosting gold's appeal as USD-denominated safe haven, as per J.P. Morgan.

Central bank purchases

Record 950 tonnes bought (esp. China, India, Russia, Poland, Brazil, Kazakhstan) to diversify reserves amid “de-dollaridation” — accounting for a 90% inflow spike. Central banks purchased a record 634 tonnes of gold through September 2025, with October adding a robust 53 tonnes — the strongest month of the year — led by Poland, Brazil, and Kazakhstan amid de-dollarisation trends, as per WGC.

Geopolitical tensions

Trade wars, US policy shifts under Trump, and global slowdown continue to fuel safe-haven demand for gold.

ETF and investor inflows

Gold ETFs hit 3-year highs as fund managers upped allocations (avg. 2.3%), as per Goldman Sachs. 

Inflation Hedge: Persistent pressures and recession fears amplified gold's store-of-value role. 

Price highlights

• Year-open: ~$2,500/oz; Mid-year (July): +27%; September: +40% (~$3,750); December: +77% (~$4,445).

• Outperformed S&P 500 (+13%) and Bitcoin (+20%), with central bank buying driving $109B quarterly inflows in Q3.