(Kitco News) – Tariff uncertainty and strong demand from ETFs and central banks drove gold prices to record highs above $4,000 per ounce in 2025, and new demand from Chinese insurance giant and the crypto community could help the yellow metal break above $5,055 by the end of 2026, according to J.P. Morgan.
After a year of the explosive demand and unprecedented price gains, J.P. Morgan’s 2026 outlook calls for the bull market to continue as the key drivers remain strong.
“While this rally in gold has not, and will not, be linear, we believe the trends driving this rebasing higher in gold prices are not exhausted,” said Natasha Kaneva, head of Global Commodities Strategy at J.P. Morgan. “The long-term trend of official reserve and investor diversification into gold has further to run. We expect gold demand to push prices toward $5,000/oz by year-end 2026.”
The weaker dollar, lower U.S. interest rates, and economic and geopolitical uncertainty are traditionally positive drivers for gold prices, and all have played a role in the ongoing rally, and the investment bank noted that the metal has served both as a debasement hedge and as a non-yielding competitor to U.S. Treasuries and money market funds.
“In the third quarter of 2025, investor (ETFs, futures, bars and coins) and central bank gold demand totalled around 980 tonnes, over 50% higher than the average over the previous four quarters,” said Gregory Shearer, head of Base and Precious Metals Strategy at J.P. Morgan.
And with the price increase, “950 tonnes translates to approximately $109 billion of quarterly demand inflow at average gold prices of $3,458/oz in the third quarter of 2025 — about 90% higher than the average of the previous four quarters,” the report noted.
J.P. Morgan Global Research’s price forecasts are based on strong ongoing investor demand, along with continued central bank demand, which they project to average 585 tonnes per quarter in 2026.
“We continue to lean on the relationship between tonnes of quarterly investor and central bank demand and prices to derive our gold price forecast,“ Shearer said. “Looking to 2026, we see around 585 tonnes of quarterly investor and central bank demand on average, comprising around 190 tonnes a quarter from central banks, 330 tonnes a quarter in bar and coin demand and 275 tonnes of annual demand from ETFs and futures, mainly front-loaded over next year.”
This relationship explains approximately 70% of the quarter-over-quarter change in the gold price, and it implies that around 350 tonnes or more of quarterly net demand from investors and central banks is needed for prices to rise each quarter. “Every 100 tonnes above 350 is worth around a 2% qoq rise in the price of gold,” the report noted.
Indeed, central banks are expected to remain a key pillar of support beneath the gold market.
“Even with three consecutive years of more than 1,000 tonnes of central bank gold purchases, the structural trend of higher central bank buying has further to run in 2026,” J.P. Morgan Global Research wrote, adding that they expect 755 tonnes of central bank purchases in 2026 – lower than the peak of 1,000+ tonnes seen over the last three years, but still well above pre-2022 averages of closer to 400–500 tonnes.
“This decline is more of a mechanical change in central bank behavior rather than a structural shift,” the report noted. “With prices around $4,000/oz and above, central banks simply don’t need to purchase as many tonnes of gold to move their gold share to the desired percentage.”
“We believe central bank demand will remain elevated next year and have been encouraged by strong buying in the third quarter of 2025, even with much higher gold prices,” Shearer said.
IMF data shows that global central bank gold holdings total nearly 36,200 tonnes and represent almost 20% of official reserves as of the end of 2024, up from 15% at the end of 2023.
“If central banks with a reported share of gold under 10% were to increase their gold holdings to 10% at a price of $4,000/oz, this would require a notional shift into gold of around $335 billion, or the equivalent of around 2,600 tonnes of purchasing,” the report said. “Even at $5,000/oz, the same exercise results in a $194 billion notional shift into gold, or the equivalent of 1,200 tonnes of purchasing.”
“With this in mind, we continue to monitor the largest reserve holders with a reported gold share below 10%” Shearer said. “Brazil reported purchases of 15 tonnes in September and another 16 tonnes in October, while the Bank of Korea also publicly discussed ‘plans to consider additional gold purchased from a medium- to long-term perspective,’”
Investor demand is also projected to continue building on the strength seen in 2025.
“In the financial gold markets, investors’ futures positioning remains long, or with an expectation the price will rise in value in the future,” J.P Morgan analysts wrote. “While it is the quickest component from a flows perspective, futures positioning is only one relatively small part of broader gold investor holdings, which also include gold ETFs and physical bar and coin holdings.”
J.P. Morgan Global Research forecasts around 250 tonnes of inflows into ETFs in 2026, “while bar and coin demand is once again set to surpass an elevated 1,200 tonnes of annual demand.”
Investor holdings of gold – including ETFs, bars and coins, and COMEX futures – reached 2.8% of total assets under management (AUM) of equities, fixed income and alternatives as of the end of September, the analysts noted.
“While gold’s share of total investor AUM has grown by around one percentage point over the last two years as prices and demand have increased, we still see the potential for this share to rise toward 4–5% over the coming years,” Shearer said. “Looking longer-term, we think part of this year’s outperformance of gold ETF holdings versus expectations, based on changes in U.S. yields alone, is symptomatic of a more structural trend of greater investor diversification into gold.”
J.P. Morgan also sees further potential for gold’s ownership pool to grow next year, with Chinese insurance companies and the crypto industry potential sources of new demand.
“While precisely timing the catalysts and inflows that will push prices higher remains difficult, we continue to have strong conviction that gold demand will have enough firepower to continue to push prices toward $5,000/oz in 2026,” Shearer said. “If anything, we think our investor demand assumptions are potentially on the conservative side. We have laid out a scenario where if diversification of just 0.5% of foreign U.S. asset holdings into gold took place, it would be enough new demand to drive prices to $6,000/oz.”
“With gold mine supply relatively inelastic and slow to respond to these higher prices and demand expected to remain robust, risk continues to skew toward reaching this multi-year target much quicker than expected,” Shearer added.
J.P. Morgan Global Research is forecasting the gold price to average $5,055 per ounce by the final quarter of 2026, and they see the yellow metal reaching 5,400 by the end of 2027.
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