Yet a growing investor pool and factors ranging from US policy to war in Ukraine mean analysts at JP Morgan, Bank of America and consultancy Metals Focus are predicting bullion hitting $US5,000 per troy ounce in 2026.
Spot gold prices reached a record $US4,381 in October, having never hit $US3,000 before March, driven by demand from central banks and investors with new participants ranging from stablecoin issuer Tether to corporate treasurers.
BofA strategist Michael Widmer said expectations of further gains or portfolio diversification are driving the buying, with impetus from US fiscal deficits, efforts to narrow the US current account deficit and a weak US dollar policy.
Philip Newman, managing director at Metals Focus, said further support stemmed from worries about US Federal Reserve independence, tariff disputes and geopolitics including war in Ukraine and Russia's interaction with NATO countries in Europe.
For a fifth year running, central bank diversification of reserves from US-dollar-denominated assets should give a foundation for gold in 2026 as they buy when investor positioning is stretched, money rotates and prices fall, analysts said.
"The price level is supported much higher than where you started because you get that central bank demand coming through," said Gregory Shearer, head of base and precious metals strategy at JP Morgan.
"And then all of a sudden we're sitting above $US4,000 in a much cleaner environment from a positioning perspective, which then allows the cycle to continue going forward," he said, referring to market signals used by investors to start extending positions again after de-risking.
JP Morgan analysts estimate that for prices to stay flat, quarterly central bank and investment demand of about 350 metric tons is needed.
They forecast this buying to average 585 tons per quarter in 2026.
Investor holdings of gold as a share of total assets under management have risen to 2.8 per cent from pre-2022 levels of 1.5 per cent, JP Morgan's Shearer said, adding that while elevated this was not necessarily a ceiling.
Morgan Stanley forecasts gold at $US4,500 per ounce by mid-2026 while JP Morgan expects average prices at above $US4,600 in Q2 and more than $US5,000 in Q4 and Metals Focus forecasts gold at $US5,000 by end-2026.
Global central bank umbrella body BIS said this month that a combination of gold and share prices soaring in unison is a phenomenon not seen in at least half a century - raising questions about a potential bubble in both.
Part of this year's gold buying was essentially a hedge against potential sharp corrections in equity markets, gold analysts said, fuelling a fire driven by tensions between historical allies over tariffs, global trade and war in Ukraine.
This remains a risk for gold, as sharp corrections in share markets often force the sale of safe-haven assets.
Nicky Shiels, head of metals strategy at MKS PAMP, expects prices to average $US4,500 in 2026, predicting that gold will become "a multi-year secular critical portfolio asset rather than a cyclical hedge".
Fed easing brought a new visible institutional investor in gold in the form of crypto company Tether, issuer of the world's largest stablecoin.
Quarterly reports show Tether bought about 26 tons of gold in the third quarter, five times more than China's central bank reported buying.
"It's not to be ignored," Morgan Stanley's Amy Gower said but added that it is unclear whether other companies would have a similar strategy because the US GENIUS Act does not list gold as a reserve asset for stablecoins.
Further investment pool expansion could come from Asia as India allowed some pension funds to buy gold and silver ETFs.
China also allowed some insurance funds to buy gold in February although Metals Focus said these purchases have been limited so far due to bullion's rally.
