Will the price of gold continue to rise: Every prediction carries a certain risk

Sat July 18 2026

The price of gold has been steadily rising in recent years. With one brief pause in the market, the price has been going in only one direction for years – up. Since 2020, it has risen from $1.585 per ounce to more than $4.500 per ounce.

Ideally, money should not lose value due to inflation, but should increase its value on its own thanks to interest. However, this is not a particularly likely scenario at the moment, as key interest rates are relatively low. Therefore, those with more capital are trying to keep their assets safe, and as many times before – they are investing in precious metals. Higher demand then leads to a rise in prices.

Deutsche Bank economists say that central banks around the world are increasingly buying gold. A study published on April 27th states that China, Russia, India and Turkey, as well as central banks of developing countries, are increasing their gold reserves. As a result, gold could reach as much as 8.000 US dollars per ounce by 2031, which would practically double its current value, according to German experts.

New toy – cryptocurrencies

Before we look to the future, it's worth considering how the current situation came about. How did the gold market boom in recent years come about?

Frank Schallenberger of Landesbank Baden-Württemberg (LBBW) cites "expectations of interest rate cuts and a weakening US dollar, strong gold purchases by central banks, as well as high demand for gold coins and bars" as reasons.

In addition, as Shallenberger tells Deutsche Welle (DW), a relatively new entrant has appeared on the market – cryptocurrencies.

They are "increasingly developing into an important new demand group because they themselves contribute to asset diversification, including through the purchase of gold. If this trend continues, it could further stimulate the growth of the gold price."

Michael Xu, a precious metals analyst at Deutsche Bank Research and one of the authors of the aforementioned study, distinguishes between "inelastic" and "elastic" demand. He points out that stable, inelastic buyers, such as central banks, have supplanted elastic buyers, i.e. private individuals such as jewelry buyers.

This stable demand, he argues, "is a key factor in the strength of the gold market in the period from 2021 to 2025."

On the other hand, Thomas Kulp, an analyst at DZ BANK's research sector, wrote for DW: "The main driver of the gold price increase in recent years has been the accumulation of geopolitical uncertainties. Gold's role as a safe haven on the one hand and its status as a guaranteed independence on the other have been the most important demand factors."

Is gold still a safe haven?

Gold has always been considered a reliable way to preserve the value of money. Although its quantity cannot be arbitrarily increased and although it is subject to speculation, this precious metal is certainly safer than keeping money under the mattress.

But is gold still suitable as a safe haven today?

"No," says Frank Schallenberger. In his opinion, large investments in gold are not a good idea, but its protective function should not be underestimated: "Investing five or ten percent of a portfolio in gold is certainly not a bad idea because it can reduce the volatility of the overall value of the portfolio."

"We think it makes sense to hold significant amounts of gold as a store of value," says Michael Xu. "The most important reasons why central bank foreign exchange reserve managers include gold in their portfolios are diversification, protection against geopolitical risks, and protection against inflation."

Thomas Kulp from DZ BANK does not question the point of owning gold at all. "Gold is and remains the ultimate safe haven. In uncertain times or during crises, the precious metal is typically in high demand."

However, he warns that this does not mean that its price cannot be subject to "sometimes very large oscillations" and that investors must always keep this in mind when allocating their assets.

Looking into the crystal ball

Every prediction carries a certain amount of risk. This applies not only to filling out lottery tickets but also to economic developments. If most forecasts were correct, there would be no more economists or business journalists, just many more multimillionaires.

Do the experts we spoke to share these forecasts? Frank Šalenberger certainly does not. "No! The strong gold market, which temporarily ended at the end of January, was fueled, among other things, by large purchases of gold ETC funds and a significant increase in central bank gold reserves. However, both groups of buyers have currently lost some of their momentum. At the moment, I do not see strong enough drivers that could lead to a doubling of the already very high price of gold in the next five years."

The co-author of the study, Deutsche Bank, stands by its forecast.

"We analyzed the accumulation of gold in the reserves of central banks of developing countries as a possible long-term driver of gold price growth," Michael Xu told DW. Therefore, he expects a further increase in central bank gold reserves, which he associates with the "return of history", that is, with a period reminiscent of the time before the end of the Cold War.

New, uncertain times, according to him, are leading to a return to the lower limit of the former range - the share of gold in central bank reserves of 40 percent. "Assuming that developing countries' foreign exchange reserves are reduced from eight to five trillion US dollars, this could correspond to a nominal gold price of US$8.000 per ounce," says Xu.

DZ BANK analyst Thomas Kulp is more cautious, however. For him, "given the events of recent years, such forecasts are not surprising."

However, he sees no reason for pessimism.

"We expect the price of gold to reach the US$5.000 level in the next twelve months. The fundamental drivers of demand remain in place. Therefore, our long-term outlook for the price of gold is positive."

Source: https://en.vijesti.me