Morgan Stanley has issued an optimistic forecast for gold, predicting the precious metal will reach $4,800 per ounce by the fourth quarter of 2026. The investment bank's projection comes after gold delivered exceptional performance in 2025, recording its best annual gains in decades.

Gold's Record-Breaking Performance

Gold demonstrated remarkable strength throughout 2025, achieving several significant milestones that underscore its appeal as a safe-haven asset.

The precious metal's 64% gain in 2025 represented its strongest annual performance since 1979, highlighting the metal's renewed appeal among investors seeking portfolio diversification and protection against economic uncertainty.

Key Drivers Behind the Forecast

Morgan Stanley's bullish outlook stems from multiple fundamental factors that are expected to support gold prices through 2026. In a note dated January 5, the bank identified falling interest rates as a primary catalyst, along with anticipated changes in Federal Reserve leadership. The combination of these monetary policy shifts creates a favorable environment for non-yielding assets like gold.

Central bank purchases and institutional fund buying represent additional pillars supporting the bank's forecast. These large-scale buyers have consistently demonstrated appetite for gold as a strategic reserve asset, providing sustained demand that helps underpin price stability and growth.

Silver Delivers Exceptional Returns

Silver significantly outperformed gold in 2025, delivering extraordinary gains that reflected both industrial demand and investment interest.

Morgan Stanley noted that 2025 marked peak deficit conditions for silver, with China's new export licence requirements adding upside risk to prices. The structural market deficit, combined with rising industrial applications and investor demand, contributed to silver's remarkable 147% surge.

Base Metals Outlook

The investment bank expressed particular optimism for aluminum and copper, citing supply constraints and growing demand fundamentals. Aluminum supply remains constrained everywhere except Indonesia, while rising Midwest Premium suggests returning U.S. buying interest.

Copper markets face continued tightness, with U.S. imports rising and supply disruptions from 2025 extending into 2026. The benchmark three-month copper on the London Metal Exchange reached $13,387.50 on Tuesday, reflecting these supply-demand dynamics.

Nickel also gained attention, rising 5.8% to $17,980 per ton on Tuesday and hitting its highest level since October 8, 2024. The bank attributed nickel's strength to supply disruption risks in Indonesia, though noted much of this risk may already be reflected in current pricing.

Gold and silver prices opened weak on Wednesday as investors engaged in profit-booking following recent rallies that pushed precious metals to one-week highs. The decline affected both domestic and international markets, with geopolitical tensions continuing to provide underlying support for safe-haven assets.

MCX Trading Performance

Domestic precious metals showed notable declines on the Multi Commodity Exchange (MCX) as profit-taking dominated trading sentiment:

International Market Trends

Global precious metals markets mirrored the domestic weakness, with spot gold falling 0.60% to $4,469.04 per ounce after achieving nearly 3.00% gains in the previous session. The pullback came despite continued geopolitical tensions and market uncertainty that typically support bullion demand.

Investors are now focusing on upcoming US payroll data for insights into the Federal Reserve's interest rate trajectory, which could significantly impact non-yielding precious metals.

Physical Gold Rates Across Major Cities

Physical gold prices varied across major Indian cities, reflecting regional market dynamics:

Expert Trading Recommendations

Jateen Trivedi of LKP Securities provided guidance for gold trading amid current market conditions. He noted that risk sentiment continues to favor higher allocation towards gold due to renewed geopolitical tensions, including reports of US involvement with Venezuela and heightened global uncertainty.

Trivedi expects gold to remain volatile but with an upward bias, projecting a near-term trading range between Rs 1,37,000 and Rs 1,42,000. The expert emphasized that geopolitical developments, including asset freezes by Swiss authorities following recent Venezuelan developments, could deepen safe-haven flows into precious metals.

Market Outlook

The precious metals complex continues to navigate between profit-taking pressures and safe-haven demand driven by geopolitical tensions. While short-term volatility persists, underlying factors including global uncertainty and potential Federal Reserve policy changes maintain support for gold and silver as defensive assets in investor portfolios.