Morgan Stanley Sees Gold Reaching $5,000 by H2 2027 Despite Near-Term Pressure

Morgan Stanley's head of metals and mining strategy, Amy Gower, believes gold prices will face near-term pressure due to long-dated bond yields at 20-year highs, some dollar strength, and rising oil prices.

Gower notes that despite the current challenges, physical demand from central banks remains strong, particularly in China, which is on track for its highest level of broad gold imports since 2017. Additionally, exchange-traded funds (ETFs) have been adding to their gold holdings, a trend Gower describes as unusual given the anticipation and subsequent Federal Reserve rate hikes.

Gower also points out that there are many reasons to hold onto gold, with $4,000 serving as a strong floor. She notes that algorithmic trading funds were sellers in July but flipped their positions into August, which may have contributed to recent selling pressure. Morgan Stanley expects the price of gold to move back above $5,000 an ounce by the second half of 2027.