Gold jumps above US$5,100 amid geopolitical tensions, strong central-bank buying and record ETF inflows
Gold blasting through US$5,000 an ounce and edging toward US$6,000 is forcing long‑horizon investors to reassess how they think about diversification and risk.
Spot gold surged above US$5,100 an ounce on Monday and has already gained more than 17 percent this year after a 64 percent jump in 2025, according to Reuters.
The London Bullion Market Association’s annual precious metals forecast survey shows analysts projecting gold could rise as high as US$7,150 and average US$4,742 in 2026
Goldman Sachs has lifted its December 2026 gold target to US$5,400 from US$4,900, while independent analyst Ross Norman expects a high of US$6,400 this year and an average of US$5,375.
“The only certainty at the moment seems to be uncertainty, and that’s playing very much into gold’s hands,” Norman said, according to Reuters.
The latest leg of the rally ties directly to policy‑driven uncertainty.
Kyle Rodda, senior market analyst at Capital.com, said a “crisis of confidence in the US administration and US assets,” triggered by “erratic decision‑making from the Trump administration last week,” has acted as a catalyst.
US President Donald Trump’s shifting tariff threats against European allies, Canada and France have added to market unease.
“This Trump administration has caused a permanent rupture in the way things are done, and so now everyone’s kind of running to gold as the only alternative,” Rodda said.
Philip Newman, director at Metals Focus, said “political uncertainty may increase further” as the US mid‑term elections approach. He added that “persistent concerns about over‑valued equity markets are likely to reinforce portfolio diversification flows into gold.”
Central‑bank buying, a major support in 2025, looks set to stay strong.
Goldman Sachs expects purchases to average 60 metric tons a month as emerging‑market central banks continue to diversify reserves into gold, Reuters reported.
Poland’s central bank, which held 550 tons of gold at end‑2025, aims to lift that to 700 tons, while China’s central bank extended its gold‑buying spree for a 14th straight month in December.
Norman said central banks “looking to de‑dollarise … and where else could you go except into gold?” are a key driver of the price spike.
Gold‑backed ETFs are reinforcing that trend.
Inflows into these funds, which hold bullion for investors, reached a record US$89bn in 2025, with 801 metric tons of inflows, the highest since 2020, according to World Gold Council data cited by Reuters.
Expectations for further US rate cuts are supporting these flows.
Chris Mancini, co‑portfolio manager of the Gabelli Gold Fund, said “there’s an opportunity cost to holding gold which has no yield” but that this cost falls as interest rates decline. He added that if the Fed keeps cutting rates in 2026, “demand for gold should rise.”
High prices have softened jewellery demand, but buying of small bars and coins in markets such as India and Europe remains firm, even as some investors take profits.
Frederic Panizzutti, global head of sales at Numismatica Genevensis, said investors in physical gold “don’t need to analyse a balance sheet, assess credit risk or worry about a country or sovereign risk.”
He told Reuters that “your only risk with physical gold is the price direction” and that as geopolitics and geoeconomics have become more complicated, “that simplicity has become more attractive.”
Analysts generally expect gold to move toward US$6,000 this year on the back of geopolitical tension and strong central‑bank and retail demand.
Newman said, “We expect further upside (for gold). Our current forecast suggests that prices will peak at around US$5,500 later this year.”
At the same time, he and others point to risks: a pullback in US rate‑cut expectations, margin calls in equities and easing concerns about Federal Reserve independence could all trigger a correction, Reuters said.
Newman expects “periodic pullbacks” as investors take profits but believes “each correction [will] be short‑lived and met with strong buying interest.”
He added that “a meaningful and sustained decline in gold would require a return to a more stable economic and geopolitical backdrop, which currently appears unlikely.”
