Morgan Stanley maintains a positive 12-month outlook for gold despite a 3.8% decline in the metal's price during 2026. Spot gold recently traded near $4,176 following a sharp sell-off earlier in the week. Analysts identify three primary factors that could provide price support for the asset in the coming months.
Physical demand remains a key driver, with central banks adding 23 metric tons of gold in July. China, in particular, purchased 20 tons in July and 20.2 tons in August, marking its largest monthly increase since October 2023. Total Chinese imports exceeded 1,000 metric tons in the first eight months of 2026, putting the country on track for its highest annual level since 2017.
The second factor involves potential intervention in the long-dated bond market, which could lower yields and reduce pressure on gold. The third factor links oil prices to inflation expectations. Potential de-escalation in the Middle East conflict could lower oil prices, thereby cooling inflation and limiting upward pressure on interest rates, which benefits non-interest-bearing assets like gold.
Market participants are closely monitoring upcoming economic data, including the September jobs report and the CPI release scheduled for October 14. These indicators will precede the Federal Reserve meetings on October 27 and 28. While volatility is expected, Morgan Stanley views $4,000 as a strong price floor for the metal.
