Gold is not in a bubble! Prices to hit new highs in second half – Metals Focus

(Kitco News) – While gold prices have consolidated above $3,000 an ounce for the past month, investors have not taken their eyes off April’s all-time highs. According to one research firm, it is only a matter of time before that level is tested and broken.

Gold still has plenty of momentum to push higher in 2026, according to Metals Focus’ flagship precious metals report, Gold Focus 2025. In its annual report published Thursday, analysts at the British research firm said they expect gold prices to reach a record annual average of $3,210 this year, with new highs likely in the second half of the year.

In an interview with Kitco News, Philip Newman, Managing Director at Metals Focus, said it’s hard to envision a scenario that could derail this new bull market. He added that, although it’s not part of their official estimates, he expects the rally to continue through 2026.

“If you look at what is happening in the global economy, there are so many factors in play. We have all the ingredients needed for a structural bull market,” he said.

Newman noted that one interesting feature of gold is how investors quickly become comfortable with new price levels, with former resistance levels often turning into new support. A year ago, he said, he would have expected the $3,000 level to be a major milestone that would trigger a wave of profit-taking.

However, given the current economic uncertainty and trade-related geopolitical turmoil, investors are undeterred by current price levels.

He emphasized that what makes 2025 unique is that investors are only now starting to pay real attention to the market. While gold has been in a solid uptrend since 2023, demand has largely been driven by central bank purchases, with most investment coming from Asia—especially China.

Newman added that investors only turned decisively bullish during the fourth quarter of last year and into this year.

“We have seen significant growth in investment demand this year, but there is still a lot of money on the sidelines. This isn’t a bubble. There is a lot of solidity in this market,” he said.

Although economic uncertainty continues to ripple through global financial markets, Newman said a major factor driving gold investment is the shifting perception of the U.S. dollar.

While the U.S. dollar remains the ultimate safe haven, Newman pointed out that trade uncertainty and the government’s unsustainable debt levels have shaken market confidence, prompting investors to seek safety and diversification in gold.

He also warned that faith in the U.S. dollar is beginning to erode, and there are real risks that the U.S.-led global trade war could push the global economy into a recession or even stagflation, as consumer prices continue to rise.

While Metals Focus forecasts record highs for the second half of this year, Newman said a more telling feature of this new bull market is the analysts’ limited downside expectations.

“For our base case, we’ve significantly raised it because we think there’s just more interest from investors. We expect to see much broader participation by investors, so that’s lifted the floor quite considerably,” he said.

In addition to robust investment demand, Newman said central banks are expected to remain key players in the gold market. Metals Focus projects that central banks will once again purchase more than 1,000 tons of gold this year—for the fourth consecutive year.

“It’s difficult to see how gold prices do not go higher when you have growing investment demand supported by central bank purchases,” he said.

Regarding potential downside risk, Newman said there would need to be a significant shift in the global economy, with economic fears disappearing in favor of stable growth. In such a scenario, investors would likely return to equities and bonds.

“That is a possibility, I would say, but it’s definitely not our base case. For us, that’s probably our lowest probability. But it’s certainly something you’ve got to think about,” he said.

Looking ahead, Newman noted that investors will not only have to navigate the noise of the global trade war and U.S. tariffs, but by the end of the year, renewed geopolitical uncertainty will likely emerge as America prepares for the 2026 mid-term elections.

He also flagged a low-profile but significant risk: what happens in 2026 when Jerome Powell’s tenure as Chair of the Federal Reserve ends.

“Are we going to get a Federal Reserve Chair that is beholden to [President Donald Trump]? Will that blow central bank independence completely out of the water?” he said. “What does that mean for the U.S. dollar?”

While investment demand is expected to remain robust and led by Asian an Chinese markets, Metals Focus expects higher prices to take their toll on jewelry demand. Ultimately, gold prices are expected to continue to rise even as demand falls this year and supply increases by 1% to new all-time highs of 3,694 tons.