Morgan Stanley Sees Path for Gold to Exceed $5,000 by 2027

Morgan Stanley has issued a bullish forecast for gold, projecting a potential path for the precious metal to climb above $5,000 per ounce in 2027. The bank noted in a recent report that gold has already reached its fourth-quarter 2026 price target of $4,450 per ounce sooner than anticipated, though it cautioned that the ascent is unlikely to be smooth.

Renewed Investor and Central Bank Demand

A key driver behind the optimistic outlook is a shift in investor sentiment tied to expectations for U.S. monetary policy. According to the bank's analyst, Amy Gower, a lower implied probability of Federal Reserve interest rate hikes has revived demand for gold-backed exchange-traded funds (ETFs).

This trend is reflected in recent fund flows:

• After outflows of 93 metric tons in May and June, gold ETFs saw inflows of 70 metric tons in July and August.
• Morgan Stanley’s economists expect the Federal Reserve to keep rates on hold through the remainder of 2026.

Central banks have also been a significant source of demand, using softer prices to bolster their reserves. Morgan Stanley highlighted that China has added 60 tons of gold so far this year, while Poland increased its holdings by 82 tons, bringing its total to 632 tons as it moves toward a stated target of 700 tons.

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Decoupling from Yields

Analysts at the bank also observed that gold has recently begun to decouple from its traditional relationship with long-term real yields. The metal's price rose in early August even as long-dated yields remained flat. Morgan Stanley suggests gold "appears to be pricing the fiscal concerns behind higher yields more than the yield level itself." Reports of a potential increase in the U.S. Treasury's buyback program have provided further support.

Potential Headwinds Remain

Despite the positive forecast, Morgan Stanley identified several risks that could introduce volatility. Upcoming U.S. inflation data could shift market expectations for Fed policy. Furthermore, short positioning on the COMEX is near its lowest level since April 2020, which leaves less room for further price gains fueled by short covering.