Samer Araij
The yellow metal is experiencing one of its most volatile and declining phases since the beginning of the year; gold prices plummeted at the opening of trading on Wednesday to record about $4150.23 per ounce , compared to its historical peak of $5594.82 in late January, recording a harsh loss of nearly $1444.6 per ounce (a decline of 25.8%), under the weight of the US Federal Reserve tightening its monetary policy and the soaring global energy prices.
The Fall of Gold: Why Will the Precious Metal Bleed in 2026?
Successive pressures caused gold to lose more than 6% of its value during September alone, amid a downward trend governed by tight monetary and geopolitical data:
- High interest rate trap and energy inflation: Market experts, in conjunction with Bank of America’s estimates, predict that gold will continue its decline during the last quarter of this year towards levels of $4,000 , with the possibility of slipping to $3,750 ; due to the Federal Reserve continuing to hint at raising interest rates at the December meeting, and the strength of the dollar index accompanied by oil prices hovering around $100 per barrel.
- The oil and dollar equation: Market data showed that since oil broke the $90 barrier last August, gold has fallen by 8.3%, compared to a 15.4% jump in oil and a 2.3% rise in the dollar, which has made bond yields and the greenback deplete the metal’s appeal in the near term.
2027 Shock: The world’s top banks bet on the $5400 peak!
In contrast to the current downward spiral, major global financial institutions agree that gold is establishing a “historic price bottom” followed by an unprecedented upward surge over the next 12 months:
- London Bullion Market Association (LBMA): Participants at its annual meeting in Sorrento, Italy, predicted that gold would jump to $5,013 an ounce , a growth of nearly 20%.
- Metals Focus: The consulting firm predicted that average prices in 2027 would reach $5,330 per ounce (+22%).
- Goldman Sachs and UBS: Goldman Sachs predicted a record high of $5,400 by the end of 2027, which is consistent with UBS’s prediction of a gradual rise starting from $5,000 in the first half and reaching $5,400.
- HSBC and Bank of America: HSBC sees gold averaging $4,825 with central banks returning to heavy buying below $4,000, while BofA links the $5,000 peak to concerns about the sustainability of US debt and the decline in inflation, warning in an unlikely scenario of a drop to only $3,500 if oil touches $150 due to an open regional war.
The driving force behind the rise: the appetite of central banks and index funds
The real support for the $5,000 scenario lies in the return of sovereign institutional buying:
- Exchange-traded funds (ETFs): Global gold funds added 121 tons last August, bringing their holdings to an unprecedented record of 4,189 tons .
- Central bank reserves: Banks boosted their purchases by buying an additional 39 tons in August, bringing the total collected by central banks worldwide to about 170 tons in the first eight months of 2026.
Between the hammer of the Federal Reserve, which is currently putting pressure on prices, and the anvil of global financial fears that are driving people towards safe havens, the current declines in gold appear to be paving the way for one of the biggest upward waves in the history of precious metals markets.
