Morgan Stanley says gold has reached its fourth-quarter price target earlier than expected and could climb above $5,000 per ounce in 2027. However, the bank warned that investors should expect continued volatility along the way.
Gold Reaches Morgan Stanley’s Target Early
Morgan Stanley analyst Amy Gower said gold has already reached the bank’s fourth-quarter forecast of $4,450 per ounce, significantly ahead of schedule.
The bank now sees a possible path for gold to move beyond $5,000 per ounce in 2027, although price swings could remain elevated as market conditions evolve.
Fed Expectations Support Gold Demand
One factor supporting the outlook is a reduced expectation that the Federal Reserve will raise interest rates again.
According to Morgan Stanley, this shift has helped revive demand for gold-backed exchange-traded funds. Gold ETFs added around 70 metric tons in July and August, following approximately 93 tons of outflows during May and June.
Morgan Stanley’s economists currently expect the Federal Reserve to keep interest rates unchanged through 2026.
Central Banks Continue Buying Gold
Central-bank purchases are also providing support for gold prices.
Morgan Stanley noted that several central banks have taken advantage of weaker prices to increase their reserves.
China has reportedly added around 60 metric tons of gold so far this year, marking its strongest accumulation since 2023.
Poland has also increased its reserves by approximately 82 tons, lifting total holdings to around 632 tons as the country moves toward its target of 700 tons.
Gold Is Breaking Away From Real Yields
Morgan Stanley also highlighted a shift in gold’s relationship with long-term real interest rates.
Gold prices increased in early August even as longer-term yields remained relatively stable. The bank believes investors may now be focusing more heavily on concerns surrounding government finances and fiscal policy rather than simply reacting to the level of yields.
Reports of a potentially larger U.S. Treasury buyback program have also provided additional support for the precious metal.
Key Risks for Gold Investors
Despite the bullish long-term outlook, Morgan Stanley identified several risks that could create short-term pressure.
Upcoming U.S. inflation data could affect expectations for Federal Reserve policy and therefore influence gold prices.
The bank also pointed to positioning in COMEX gold futures. Short positions are close to their lowest levels since April 2020, which means there may be less potential for additional buying caused by traders closing bearish positions.
Overall, Morgan Stanley remains constructive on gold and sees the possibility of prices exceeding $5,000 per ounce in 2027, but expects the move higher to include periods of significant volatility.
