Gold prices are currently facing challenges due to persistent inflation and rising interest rates, which are pushing investors toward higher-yielding assets. However, Matthew Piggott, Director of Gold and Silver at Metals Focus, argues that the market is consolidating rather than entering a bear market. He notes that institutional and central bank buying continues to support gold above $4,000 an ounce, despite investor caution.
Metals Focus forecasts gold prices will average $5,330 an ounce in 2027, a 16% increase from this year's projected average of $4,600. The firm expects gold to average $5,600 in the fourth quarter of next year, with prices potentially approaching $6,000. Silver is also expected to regain its investment appeal, averaging $84.40 an ounce next year and rising above $90 in the fourth quarter.
Piggott attributes gold's struggle to sustain a rally to competition for investment capital from equities, cryptocurrencies, energy, and other commodities. Elevated bond yields have increased the opportunity cost of holding non-yielding assets. However, he emphasizes that institutional investors have consistently returned to the gold market when prices have fallen toward $4,000 an ounce, establishing a floor supported by central banks.
The underlying economic and geopolitical factors that supported gold's rally in 2025 remain intact, with growing government debt and fiscal uncertainty strengthening the long-term investment case. However, these structural drivers are currently overshadowed by immediate concerns about inflation, energy prices, and monetary policy. Piggott notes that concerns about de-dollarization, government debt, and fiscal sustainability continue to encourage institutional investors to hold gold.
Metals Focus expects central banks to remain substantial net buyers of gold in 2027, although official-sector purchases have moderated from the exceptional levels seen between 2022 and 2024. Despite his bullish longer-term outlook, Piggott warns that the ongoing conflict in the Middle East remains a significant obstacle to renewed investment demand. Elevated energy prices have driven inflation higher, strengthened the U.S. dollar, and reinforced expectations of restrictive monetary policies.
Piggott expects gold's rally to resume in the fourth quarter, although the timing has been pushed back due to the prolonged Middle East conflict. He also anticipates seasonal physical demand to provide additional support through the final months of the year. For silver, Metals Focus forecasts a shift from a deficit to a surplus in 2027, with industrial demand declining due to reduced consumption in the photovoltaic sector. However, silver's rally to $90 will depend on investor sentiment rather than industrial demand.