Gold regains some shine
- Gold broke out of trading range in early August
- In June, prices were 30% below January high
- Macro tailwinds may support gains into early 2027
After spending 2025 and the beginning of 2026 in the financial limelight as they pushed record high after record high, gold and other precious metals slipped into the shadows for several months after their uptrends abruptly reversed in late January.
Following the collapse (in March and May) of the market’s only two significant attempts to rebound, in June cash gold prices fell below $4,000—their lowest level since last November, and nearly 30% below their record high near $5,600.
But after a rangebound July that saw the market test those June lows, gold appeared to turn a page in August. December gold futures (GCZ6) broke out their consolidation with a 4.2% rally on August 5, followed through to the upside over the next couple of weeks and, with another 4%-plus rally on Wednesday of this week, extended their month-to-date gain to nearly 12%:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Of course, given this move followed a nearly six-month slump, a question on the minds of many traders is whether the recent rally will have more staying power than the four- and three-week bounces that preceded it this year.
While noting that spot gold prices reached their $4,450 fourth-quarter forecast sooner than expected, Morgan Stanley & Co. analysts believe the market could extend its gains in the coming months, with help from a few potential tailwinds.
First, the analysts point out that because higher interest rates generally challenge non-yielding assets like gold, recently declining probabilities of Fed rate hikes have increased gold ETF inflows. It’s unlikely a coincidence that gold’s biggest up days this month—August 5 and August 19—occurred as longer-term US Treasury yields were retreating. Second, prices have been supported by renewed central bank gold purchases around the globe.1
They also highlight the current environment’s parallels to the second half of 2025 (and into January 2026), when Fed rate cuts pushed down short-term yields, while long-term yields were supported by rising government debt, “currency debasement” concerns, and inflation. This time, they note, long-term yields are rising with oil prices, elevated tech-sector debt issuance, and a renewed concern about government debt levels. In other words, the current drivers may be slightly different, but the end result remains a potentially a gold-friendly backdrop.
The considerations (and others) lead the analysts to see a path—albeit, a potentially bumpy one—to $5,000 gold by early 2027. The Fed outlook, they believe, will remain the key factor for gold ETF demand, which underscores the importance of upcoming US inflation data and Fed communications.
Market Mover Update: On Thursday October WTI crude oil futures (CLV6) hit their highest level ($87.69 intraday) since early June as US-Iran tensions re-escalated.
Xylem (XYL) closed Thursday more than 6% below its August 10 close (see “Longer-term options play?”).
With earnings scheduled for next Wednesday (August 26), NVIDIA (NVDA) closed lower for a fifth-straight day on Thursday (see “AI bellwether enters key stretch”).
Today’s numbers include (all times ET): S&P Global Manufacturing and Services PMIs (flash), 9:45 a.m.
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1 MorganStanley.com. Gold’s Rapid Rebound. 8/20/26.