Gold’s correction prompts a forecast reset
The desk maintains a constructive long-term view on gold, despite the recent price correction outlined in the full note . The shift in market dynamics, driven by rising Treasury yields, a stronger U.S. dollar, and diminished ETF demand, is prompting a recalibration of gold price forecasts. This has led to a downward adjustment in projections, with anticipated averages for Q3 and Q4 2026 now set at $4,300 and $4,600 per ounce, respectively. In a climate of persistent geopolitical risk, the focus on interest rate implications suggests a complex environment ahead for gold investors.
What the desk is arguing
The desk's view centers on the revaluation of gold's price trajectory amidst recent headwinds from rising U.S. Treasury yields and a firm dollar. Per the full note , while the structural drivers supporting gold remain intact, the path forward is expected to be volatile, leading to a revised outlook for prices in the forthcoming years.
The firm currently projects gold to average $4,300/oz in Q3 and $4,600/oz in Q4 of 2026, down from earlier expectations of $4,850/oz and $5,000/oz, respectively. This adjustment underscores the market's shift in focus away from safe-haven purchases towards the impacts of an increasing interest-rate environment and tighter financial conditions.
The alternative view, which may have expected gold to maintain its upward momentum due to ongoing geopolitical uncertainties, is now being challenged by the reality of investor demand and macroeconomic influences.
Where it sits in our coverage
Currently, our consensus target for gold aligns with a more cautious stance, suggesting a target of $4,400 with a range from $4,100 to $4,700. Key firms providing insights include: - jpmorgan: $4,500 by Dec-26 - goldman: $4,600 by Dec-26 - bofa: $4,300 by Dec-26
The desk's updated forecasts appear to fit on the lower end of the consensus spectrum, reflecting a unique cautious approach compared to the more optimistic targets set by goldman and others.
How other firms see it
Several firms, including jpmorgan and goldman, maintain a similar outlook on gold, though they project slightly higher averages for 2026. Contrasting this, bofa has a more bearish stance, seeing lower pricing for gold based on anticipated fiscal tightening.
For additional context, traders should monitor the USD and its effects on gold prices, as fluctuations in the currency directly impact gold's appeal as an alternative investment. Also, patience will be necessary with the Federal Reserve's monetary policy trajectory playing a crucial role in shaping market expectations.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Gold's price expectations adjusted lower amid rising yields and a strong dollar.
- 02Current forecasts anticipate an average of $4,300 in Q3 and $4,600 in Q4 of 2026.
- 03Geopolitical tensions persist, yet investor sentiment is shifting towards interest rate implications.
- 04We remain constructive on gold long-term despite short-term challenges.
Market implications
Traders should keep an eye on gold prices around the revised averages of $4,300 and $4,600 per ounce, especially in the context of ongoing interest rate discussions. The performance of the USD will also be critical in influencing gold's appeal as demand fluctuations will likely shape market positioning.
Risks to this view
A significant catalyst that could drive gold prices higher would be a sudden shift in Federal Reserve policy, especially if the central bank signals a pivot towards rate cuts. Additionally, increasing geopolitical instability that fuels safe-haven demand could surge gold prices unexpectedly.
Articles Gold’s correction prompts a forecast reset 11:48 Commodities, Food & Agri Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Gold’s correction has become increasingly difficult to ignore Ewa Manthey We continue to believe the structural drivers supporting gold remain intact, though the path higher is likely to be slower and more volatile than we previously expected After reaching record highs earlier this year, prices have fallen sharply, leaving gold in negative territory for the year. Rising Treasury yields, a stronger US dollar and weaker investor demand have weighed on the market, forcing investors to reassess the factors that drove the rally. The sell-off may appear surprising given ongoing geopolitical uncertainty and continued central bank buying.
However, gold’s weakness highlights the extent to which markets have shifted their focus from safe-haven demand towards the implications of higher interest rates and tighter financial conditions. While we remain constructive on gold over the medium term, the near-term environment has become more challenging. As a result, we are lowering our gold price forecasts.
Gold struggles despite geopolitical tensions Source: Refinitiv, ING Research "> Source: Refinitiv, ING Research We are lowering our forecasts Higher yields, a stronger dollar and weaker ETF demand are likely to weigh on gold for longer than we previously anticipated. We now expect gold to average $4,300/oz in the third quarter of 2026 and $4,600/oz in the fourth quarter, down from our previous forecasts of $4,850/oz and $5,000/oz, respectively. While markets have become increasingly concerned that interest rates could remain higher for longer, our US economist continues to expect the Federal Reserve to remain on hold.
Still, elevated yields and a strong dollar are likely to remain near-term headwinds for gold. Markets have repriced the interest rate outlook The primary driver behind gold’s recent decline has been a significant repricing of interest rate expectations. Following recent Fed communication, investors have pushed back expectations for monetary easing, driving Treasury yields higher and supporting the US dollar.
This has created a less favourable backdrop for gold, which typically struggles when real yields rise and the dollar strengthens. At the same time, geopolitical tensions have failed to generate the type of safe-haven inflows seen during previous periods of uncertainty. Instead, markets have focused on the inflationary implications of geopolitical developments and what they could mean for monetary policy.
ETF demand has weakened ETF investors were a major force behind gold’s rally at the start of the year, helping push holdings to their highest level since 2022. However, sentiment shifted sharply in March as investors reassessed the outlook for US monetary policy. Rising yields and a stronger dollar triggered profit-taking, particularly among North American investors, leading to a reversal in ETF flows.
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