JAKARTA — Morgan Stanley Research has maintained its forecast for gold to reach USD 5,200 per ounce by the end of 2026, as the market continues to strengthen and tests a new resistance level at USD 4,700 per ounce.

Quoted by KITCO, Amy Gower, metals and mining commodities strategist at Morgan Stanley Research, said gold is expected to close 2026 at USD 5,200 per ounce, around 10% higher than current levels.

According to Gower, gold’s weaker performance in recent months is a natural development amid rising geopolitical tensions driven by the ongoing war in Iran.

She explained that the conflict has triggered energy supply shocks, reducing market expectations for interest rate cuts in the United States. As a result, gold is no longer functioning optimally as a safe-haven asset.

“Gold’s sensitivity to monetary policy has now become the main driver of prices. This reduces gold’s role as a hedge against geopolitical and inflation risks,” Gower said.

Rising oil prices, which have fuelled inflationary pressure, have forced the Federal Reserve to reassess its monetary easing policy.

Markets have therefore begun scaling back expectations for rate cuts this year. Nevertheless, Morgan Stanley still expects at least one interest rate cut, which it believes could support further gains in gold prices.

Gower said gold would likely remain sensitive to movements in real yields, although upside potential remains intact.

Morgan Stanley forecasts one rate cut in January, followed by another reduction in March 2027.

According to Gower, such conditions would benefit gold, particularly because investment decisions in gold exchange traded funds (ETFs) are heavily influenced by the direction of monetary policy.

At the same time, the future direction of gold prices remains highly dependent on developments in the Middle East conflict.

President Donald Trump is reported to have said that both sides are working towards a long-term peace agreement and have made progress.

Several analysts believe that if the crisis ends soon, the global economy could recover from the current energy supply disruptions.

Conversely, Gower warned that the longer the conflict continues, the greater the risk of pressure on gold prices, as markets increasingly expect high interest rates to remain in place for longer, or even rise further.

Meanwhile, upside potential in a peace scenario is also viewed as limited, since already elevated gold prices could weaken demand from ETFs, central banks and consumers. (DK/ZH)