Gold’s record rally might be just taking a breather. JP Morgan Private Bank expects the precious metal to exceed $5,200 per ounce by the end of 2026 – about 20% higher than current levels.

Central Banks Drive Demand Shift

According to Alex Wolf, the bank’s global head of macro and fixed income strategy, the fundamental reweighting of international reserves is behind the rally.

Gold as part of “forex reserves is still relatively small as an overall percentage” for many central banks, especially in emerging markets, he told Bloomberg.  “A lot of it will still go to dollars. So we’re not even really looking at gold as replacing dollars. It’s just an increasing share will go to gold,” he clarified.

Also Read: Don’t Call It A Bubble: Why Gold’s Rally Has Deep, Structural Support

De-Dollarization Trend Gains Momentum

Wolf added that many countries in Asia, the Middle East, and Eastern Europe are diversifying away from the greenback to reduce financial exposure to Western sanctions and geopolitical risks. That trend has accelerated since 2022 and shows few signs of slowing, even as gold trades near record highs.

The World Gold Council reported that central banks added about 634 tons of bullion to their reserves in the 12 months through September. The number is slightly down from record levels last year but still above the average.

The organization expects total official sector demand to range between 750 and 900 tons for 2025, led by China, Poland, and Turkey. While China has drawn most of the headlines, other emerging economies with growing fiscal surpluses are also adding to their holdings.

Analysts Align on Bullish Outlook

JP Morgan’s call is similar to the Bank of America, which also set its price target at $5,000. The bank cited “unorthodox” U.S. fiscal policy and concerns about the stability of global fiat currencies. Its analysts expect a continued rise in investment demand, particularly from funds and retail investors seeking portfolio diversification. They note that even modest increases in gold allocations across large institutional portfolios could drive significant new demand.

Lesser-Known Supply Disruption Risk 

While miners are rushing to increase production, the market must note a structural weakness in supply. According to the International Council on Mining and Metals, roughly one-third of global mines still fail to meet the Global Industry Standard on Tailings Management.

Mining waste management is a serious matter and carries a high risk in operations. The risk is not theoretical. In 2024, a collapse at Turkey’s Çöpler mine caused multiple fatalities and forced a shutdown. 

Production ramp-ups will only put additional pressure on tailing management, and any critical failures could disrupt the output, sending prices higher than even JP Morgan or Bank of America expect.

Price Watch: SPDR Gold Trust ETF  is up 56.27% year-to-date.

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