Gold Rally Outpaces Stocks: 2026 Forecast

Gold Crushed Stocks This Year. Could the Rally Continue in 2026?

Over the past 50 years, the stock market has typically delivered the highest average annual returns among major asset classes. However, 2025 told a different story entirely.

Precious metals, particularly gold, stole the spotlight with an impressive gain exceeding 64%. This surge was fueled by escalating geopolitical tensions, a decelerating U.S. economy, a depreciating dollar, and the Federal Reserve’s implementation of an interest rate reduction cycle. These economic dynamics spurred substantial purchases by central banks and ignited a massive surge in demand for exchange-traded funds (ETFs) holding physical gold.

Meanwhile, the S&P 500 rose by 16.39%, which surpassed its long-term historical average but fell far short of gold’s performance. Notably, four of the Magnificent Seven tech stocks lagged behind the broader index benchmark.

This disparity led gold to establish over 50 new record highs throughout the year, even as equities faced headwinds from worries over elevated valuations and signs of an emerging AI bubble.

What’s driving gold’s bullish 2026 outlook

A significant portion of gold’s exceptional performance in 2025 can be traced to what Peter Klein, founder and chief investment officer at ALINE Wealth Management, describes as the three horsemen: ongoing inflationary pressures, the metal’s relative underperformance in prior years leading up to 2025, and the dramatic rise in global debt levels.

Looking forward, Klein remains optimistic about gold, anticipating continued repercussions from persistent consumer price increases. He notes, “I still believe that we’re going to be somewhat surprised or saddled with this notion of sticky, second-wave inflation,” alluding to an expected rebound in price escalations.

This concern was echoed by Federal Reserve Chairman Jerome Powell in his remarks following the central bank’s third and final interest rate cut of 2025 during the December meeting. Inflation was referenced 79 times in the press conference, with Powell linking elevated costs directly to President Donald Trump’s trade policies.

“Inflation for goods has picked up, reflecting the effects of tariffs,” Powell stated. “In the near term, risks to inflation are tilted to the upside.”

Although prospects for further rate reductions in early 2026 are limited, resurgent inflation could once again propel gold prices upward. Historically, when inflation diminishes the purchasing power of fiat currency, investors flock to gold as a reliable safe-haven asset and enduring store of value.

This pattern played out vividly in 2025, as the U.S. dollar lost more than 10% of its value from its year-to-date peak on January 13. Starting from that point, gold’s price climbed by 63%.

The skyrocketing demand for ETFs, which hit record assets under management in 2025, is poised to significantly influence gold’s trajectory in the coming year as well.

“The ETFs have been where the money’s been going,” Klein explains. “Gold ETFs have soaked up a lot of demand.” He points out that this demand was nine times higher than the previous year.

Analysts in the precious metals sector highlight ETF inflows as a key force behind gold’s price momentum over the last year, a trend they anticipate will persist. J.P. Morgan Global Research projects sustained strong investor interest, forecasting approximately 250 tonnes (roughly 551,000 pounds) of inflows into gold ETFs throughout 2026.

Gregory Shearer, head of Base and Precious Metals Strategy at J.P. Morgan, identifies another critical factor: persistent central bank demand for gold, which is expected to stay robust in 2026. This is supported by vigorous purchases in the third quarter of 2025, even at peak prices.

Why investment banks are cautiously optimistic about gold

The prevailing view among experts suggests gold is primed for yet another robust year. That said, Klein advises moderation in expectations, observing that “gold has had a pretty good, a pretty heroic run [in 2025].”

His year-end price projections range from $4,800 to $4,900. These figures closely match Goldman Sachs’ target of $4,900 per troy ounce by the end of 2026, as well as Morgan Stanley’s $4,800 forecast. The latter bank emphasizes robust Chinese retail buying, intensified central bank acquisitions, and worries over global economic growth as supportive elements.

J.P. Morgan holds an even more positive stance. “Gold demand will have enough firepower to continue to push prices toward $5,000 per troy ounce in 2026,” Shearer stated. This aligns with Bank of America’s high-end 2026 target, implying a potential 14.34% increase from current levels.

Shearer concedes this projection might even be understated, as J.P. Morgan has outlined a scenario involving substantial foreign capital flows into gold that could generate sufficient demand to elevate prices to $6,000 per troy ounce—a 37.21% jump from today’s value.