Gold resumes its upward trend, surpassing $4,700; institutions predict it will reach $5,200 by the end of the year.
2026-05-07 10:06:56
The gold market has recently shown renewed upward momentum, with prices surpassing the key resistance level of $4,700 per ounce. While a full recovery of this key price range is still some distance away, investment banks remain optimistic about the future performance of gold.
In her latest precious metals research report, Morgan Stanley's Metals and Mining Commodities Strategist, Amy Gower, reiterated her optimistic outlook for gold prices. She believes that gold prices could reach approximately $5,200 per ounce by the end of this year, representing an increase of about 10% from current levels.
Gore said she was not surprised by gold’s relatively poor performance in recent months, despite the ongoing geopolitical uncertainty caused by the conflict with Iran.
Gore points out: "The conflict in Iran has triggered an energy supply shock, reducing market expectations for a US interest rate cut. In this context, it is not surprising that gold is unable to effectively play its traditional safe-haven role."
She further analyzed, "Gold's sensitivity to monetary policy has become a key driver of current price trends, which to some extent obscures its safe-haven attributes and reduces its effectiveness in hedging geopolitical and inflation risks. Gold prices not only reflect the impact of a specific event, but more importantly, they reflect the policy responses taken by various countries after the event."
Currently, high oil prices are driving up inflationary pressures, forcing the Federal Reserve to reassess its accommodative monetary policy stance, and the market has begun to lower its expectations for interest rate cuts this year. Nevertheless, Morgan Stanley still expects the Fed to implement at least one rate cut this year, a judgment that will provide significant support for gold prices.
"Gold may remain highly sensitive to real yields, but we believe it still has room to rise further," said Gore. Morgan Stanley expects the Federal Reserve to cut rates once in January 2027, followed by another rate cut in March.
She added, "This policy path will benefit gold, especially since ETF purchase decisions are extremely sensitive to policy signals, and gold is currently realigning with real interest rate trends."
Current market volatility suggests that gold's future performance will largely depend on the development of the conflict in the Middle East. President Trump recently stated that significant progress is being made towards reaching a lasting peace agreement.
Analysts generally believe that if the Middle East crisis can end soon, the global economy is expected to gradually recover from the current energy supply crisis. However, Gore warned that the longer the conflict lasts, the greater the risk to gold prices.
She pointed out, "If the market begins to expect interest rates to remain high for an extended period or even to rise, gold prices may face some pressure. At the same time, in a scenario where the crisis is resolved quickly, the upside potential for gold may also be limited, as the already high prices may dampen demand from ETFs, central banks, and consumers."
In summary, despite the pressure on monetary policy adjustments stemming from high oil prices, professional institutions such as Morgan Stanley remain cautiously optimistic about the medium- to long-term outlook for gold. In the coming period, the Federal Reserve's interest rate decisions and the evolving geopolitical situation in the Middle East will jointly determine the direction of the gold market. Investors need to continuously monitor relevant developments to seize potential market opportunities.
Spot gold daily chart source: EasyForex
At 10:06 AM Beijing time on May 7, spot gold was trading at $4716.38 per ounce.
Morgan Stanley maintains its high price target of $5,200 by year-end.
In her latest precious metals research report, Morgan Stanley's Metals and Mining Commodities Strategist, Amy Gower, reiterated her optimistic outlook for gold prices. She believes that gold prices could reach approximately $5,200 per ounce by the end of this year, representing an increase of about 10% from current levels.
Gore said she was not surprised by gold’s relatively poor performance in recent months, despite the ongoing geopolitical uncertainty caused by the conflict with Iran.
Energy shocks weaken gold's safe-haven appeal; monetary policy dominates gold price movements.
Gore points out: "The conflict in Iran has triggered an energy supply shock, reducing market expectations for a US interest rate cut. In this context, it is not surprising that gold is unable to effectively play its traditional safe-haven role."
She further analyzed, "Gold's sensitivity to monetary policy has become a key driver of current price trends, which to some extent obscures its safe-haven attributes and reduces its effectiveness in hedging geopolitical and inflation risks. Gold prices not only reflect the impact of a specific event, but more importantly, they reflect the policy responses taken by various countries after the event."
Currently, high oil prices are driving up inflationary pressures, forcing the Federal Reserve to reassess its accommodative monetary policy stance, and the market has begun to lower its expectations for interest rate cuts this year. Nevertheless, Morgan Stanley still expects the Fed to implement at least one rate cut this year, a judgment that will provide significant support for gold prices.
Real yields and policy signals remain key variables.
"Gold may remain highly sensitive to real yields, but we believe it still has room to rise further," said Gore. Morgan Stanley expects the Federal Reserve to cut rates once in January 2027, followed by another rate cut in March.
She added, "This policy path will benefit gold, especially since ETF purchase decisions are extremely sensitive to policy signals, and gold is currently realigning with real interest rate trends."
The trajectory of the Middle East conflict is the biggest uncertainty.
Current market volatility suggests that gold's future performance will largely depend on the development of the conflict in the Middle East. President Trump recently stated that significant progress is being made towards reaching a lasting peace agreement.
Analysts generally believe that if the Middle East crisis can end soon, the global economy is expected to gradually recover from the current energy supply crisis. However, Gore warned that the longer the conflict lasts, the greater the risk to gold prices.
She pointed out, "If the market begins to expect interest rates to remain high for an extended period or even to rise, gold prices may face some pressure. At the same time, in a scenario where the crisis is resolved quickly, the upside potential for gold may also be limited, as the already high prices may dampen demand from ETFs, central banks, and consumers."
Overall Outlook
In summary, despite the pressure on monetary policy adjustments stemming from high oil prices, professional institutions such as Morgan Stanley remain cautiously optimistic about the medium- to long-term outlook for gold. In the coming period, the Federal Reserve's interest rate decisions and the evolving geopolitical situation in the Middle East will jointly determine the direction of the gold market. Investors need to continuously monitor relevant developments to seize potential market opportunities.
Spot gold daily chart source: EasyForex
At 10:06 AM Beijing time on May 7, spot gold was trading at $4716.38 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
