Morgan Stanley Sees Gold Prices Supported by Central Banks and Geopolitics

Gold prices have come under pressure after a recent selloff, but Morgan Stanley believes the long-term case for holding bullion remains intact. According to Amy Gower, head of metals and mining strategy at Morgan Stanley, three forces are helping support gold: robust demand, possible shifts in bond yields, and geopolitical factors.

Central banks have been major buyers of gold, with a net 23 metric tons purchased in July, led by China's 20-metric-ton purchase. China's total gold imports, including private and institutional demand, exceed 1,000 metric tons in the first eight months of the year.

Morgan Stanley expects $4,000 as a strong floor for gold heading into Q4 2026. Gower points to sustained central bank buying, fiscal worries, and the possibility of lower yields or easing inflation as factors that could support prices in the coming months. However, higher bond yields remain a challenge for gold due to its lack of income.

The Middle East is another factor investors are watching, with a rapid de-escalation of the conflict potentially pushing oil prices lower, easing inflation expectations, and reducing pressure on interest rates and bond yields.