Wedoany.com Report-Nov. 11, Gold prices are expected to rise above $5,000 an ounce next year, driven mainly by central bank purchases in emerging-market economies, according to JP Morgan Private Bank. Alex Wolf, the firm’s global head of macro and fixed income strategy, told Reuters that prices could reach $5,200 to $5,300 by the end of 2026, representing more than a 25% increase from current levels.

Central bank buying has been a key driver behind gold’s strong rally over the past two years, as policy makers sought a store of value and portfolio diversification. Gold reached record highs above $4,380 in October before easing in recent weeks, though it remains over 50% higher for the year.

Wolf noted that gold still represents a relatively small portion of forex reserves for many central banks, especially in emerging markets. “We still see them adding,” he said, though the pace of purchases may moderate due to gains in prices. Data from the World Gold Council shows central banks added 634 tons of bullion to reserves in the year through September. While below levels seen in the previous three years, this remains comfortably above pre-2022 averages. The council forecasts total purchases for 2025 to range between 750 and 900 tons.

China has been a leading buyer, reflecting its aim to diversify reserves and reduce reliance on US-centric financial markets. Other emerging economies, including Poland, Turkey, and Kazakhstan, have also increased their gold holdings. Wolf explained that many of these countries run budget surpluses with large cash flows that need reinvestment. “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 said.

JP Morgan’s outlook is among the most bullish on Wall Street, particularly after gold saw a 6% pullback since reaching its all-time high on October 29. Other major banks remain positive: Goldman Sachs forecasts gold at $4,900 by the final quarter of 2026.

Wolf also highlighted additional factors supporting prices, including increased gold holdings by investors and ongoing concerns about fiat currencies. He added that the share of gold in investment portfolios remains low, suggesting room for further demand. “Even if you get a higher share of investors to add just up to 5% in gold, that still presents further demand and likely further upside,” he said.

Overall, central bank purchases, growing investor interest, and portfolio diversification needs are expected to keep gold on an upward trajectory, with emerging-market economies playing a key role in supporting future gains.