Gold to Shine Through 2026 as Investors Seek Hedge Against Market Bubbles

The report notes, "We remain Overweight on gold, with 3- and 12-month price targets at USD 4,350/oz and USD 4,800/oz, respectively. Ongoing Emerging Market (EM) central bank demand and supportive macro conditions should sustain gold's rally."

It expects gold to extend its multi-year rally, supported by sustained central bank buying, a weaker US dollar and the re-emergence of gold's inverse relationship with real bond yields.

These factors, combined with elevated geopolitical and macroeconomic risks, are reinforcing gold's role as a key portfolio diversifier, it said.

While gold prices are already at record highs in inflation-adjusted terms, the bank notes that the metal remains relatively inexpensive when compared with global equities, particularly the US S&P 500.

The outlook comes as markets debate whether soaring equity valuations driven largely by AI enthusiasm are approaching bubble territory.

While Standard Chartered does not see conditions yet resembling past financial crises, it warns that higher dispersion across asset classes makes diversification essential. In this environment, gold is expected to act as a stabilising force should optimism around growth assets falter.

It highlighted that the emerging market central banks continue to diversify away from the US dollar, and gold remains their preferred reserve alternative. This diversification trend has not run its course, providing a strong, price-insensitive source of demand that underpins the market even during bouts of volatility.

The report expects the USD to weaken over a 6-12 month horizon as the Federal Reserve cuts rates further and the US yield advantage narrows.

Notably, a softer dollar boosts gold prices by making the metal cheaper for non-US buyers and reinforcing its role as a currency hedge.

- ANI