Gold Could Hit USD 5,000/oz as Central Banks Drive Demand
NDB Wealth predicts gold could hit USD 4,200-5,000 per ounce as central banks and Asian investors drive demand, defying US interest rate trends.
The global gold market is witnessing a fundamental shift in how prices are determined. According to a recent report by NDB Wealth Management, the gold price forecast suggests the precious metal could climb to between USD 4,200 and USD 5,000 per ounce over the next 12 to 24 months.
While gold was trading at USD 4,118.91 per ounce at the time of the report—marking a slight dip of 0.14 per cent—the long-term outlook remains bullish. The report highlights a surprising trend: gold is continuing to gain value even under economic conditions that typically suppress it, such as a stronger US dollar, persistent inflation, and higher US interest rates.
The 'Fed' No Longer Dictates the Market
For years, gold prices have moved in lockstep with the US Federal Reserve's interest rate decisions. However, NDB Wealth notes that "gold has stopped trading off the Fed." The primary drivers of the market have shifted away from Western monetary policy toward aggressive buying by central banks and investors in Asia.
This shift is evidenced by the stark contrast in investment patterns between East and West:
- Asian Markets: Gold funds in Asia saw net inflows of nearly 70 tonnes in the first half of the year, marking their strongest first-half performance in history.
- North American Markets: In contrast, North American gold funds experienced outflows of approximately 61 tonnes during the same period, as higher US real yields and a firm dollar deterred Western investors.
Central Banks and the Push for Diversification
The surge in demand is largely fueled by central banks seeking to diversify their reserves. Rather than chasing short-term profits, these institutions are buying gold to reduce their systemic dependence on the US dollar.
The data supports this trend, showing that central banks purchased 289 tonnes of gold in the second quarter of 2026 alone. Looking ahead, the World Gold Council projects that official-sector buying will remain robust, with an estimated 850 tonnes expected in 2026, nearly matching the 863 tonnes recorded in 2025.
Supply Constraints Adding Pressure
While demand is soaring, the supply side is struggling to keep pace. Global mine production is only expected to grow by a modest 2.4 per cent, reaching 3,907 tonnes in 2026. The report points out that the mining industry cannot react quickly to price spikes due to high operational costs and the long timelines required to develop new mines.
Potential Scenarios for the Future
NDB Wealth has assigned a 50 per cent probability to its base-case scenario of gold trading between USD 4,200 and USD 5,000 per ounce. However, several variables could alter this trajectory:
Factors that could drive prices LOWER:
- The establishment of a lasting peace in the Gulf region.
- A significant easing of global inflation.
- A definitive pause in US interest rate hikes.
Factors that could drive prices HIGHER:
- Growing concerns over the financial stability of the US government.
- Questions regarding the independence of the Federal Reserve.
- Continued strong demand from Asian buyers and central banks.