"Until a few weeks ago, gold looked unstoppable as it blew through record high after record high and at one point was up more than 60% for the year. But since peaking earlier this month, prices are down 9%, hovering around $4,000 per ounce. Some on Wall Street tried to explain the surge in gold demand by citing the desire to shift away from dollar-denominated assets or by pointing to the so-called debasement trade, which assumes governments will let inflation run hot to ease their debt burdens and erode the value of bonds."
"But Hamad Hussain, climate and commodities economist at Capital Economics, had a more straightforward explanation in a note on Monday. "The latest leg of the gold rally looks like a market bubble that is in its final stages," he wrote. "So unlike some analysts, we are revising our forecasts lower and now expect prices to fall to $3,500 per ounce by end-2026." The spike in gold prices after August particularly carried the whiff of "fear of missing out" as a key driver, Hussain said."
Gold prices have retreated from recent peaks, falling about 9% from the highest levels and hovering near $4,000 per ounce while stocks hit records. Explanations for the earlier surge included a shift away from dollar-denominated assets and the so-called debasement trade. Capital Economics assesses the latest rally as resembling a market bubble and projects lower prices toward $3,500 per ounce by end-2026. Long-term demand factors such as central bank reserve buying and Chinese investor demand support structurally higher prices, but those drivers are limited and may not sustain prior market share gains.
Read at Fortune
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