Banks Boost Gold Forecasts: One Sees +30% Bull-Case Potential

Over the past several years, so-called “gold bugs” have been among the most validated investors in the market. As of the September 19 close, the SPDR Gold Shares (NYSEARCA: GLD) fund has risen by nearly 118% over the past three years. Gold’s spot price trades at around $3,680 per ounce, compared to around $1,675 in 2022.

Several investment banks see the price of gold going even higher, with multiple analysts lifting their forecasts. Below, we’ll break down the trends driving gold’s gains that look poised to continue, and detail how high these analysts see the metal going.

We’ll also provide details on the most tried-and-true ways to benefit from a potential extension of gold’s rally.

Inflation Remains Well Above Fed’s Target with Further Cuts Expected

Persistent inflation, which remains considerably above the Federal Reserve’s 2% target, has been one of the key drivers of gold’s soaring price. This is because high inflation reduces the value of holding fiat-denominated assets.

For example, if a U.S. dollar-denominated bond provided a nominal yield of 5% in a year, but inflation was 6%, the investor’s purchasing power actually decreased by 1%. The difference between a nominal yield and inflation is often called a “real yield."

When real yields fall or turn negative, often due to excessive inflation, gold becomes a more attractive store of value. Additionally, it is widely considered a “safe haven” asset in times of economic and geopolitical volatility.

In August, the Consumer Price Index (CPI), one of the main measures of inflation, increased by 2.9% from the prior year. Now, the Fed has lowered the Fed Funds Rate by 25 basis points to between 4.25% and 4.50%, despite inflation still being well above its target.

Additionally, markets are forecasting a high probability of two more rate cuts in 2025. This is good news for gold, signaling the Fed isn’t fully committed to getting inflation back to pre-pandemic levels as it sees avoiding recession as the more pressing concern.

This creates potential for real yields to fall, and for gold to rise.

Analysts See 8% Upside on Average, With Potential for +30% Gains

German giant Deutsche Bank notably raised its price target on gold for 2026 to $4,000 per ounce. One of its key reasons for this is President Trump’s “repeated attempts to interfere with the Fed’s decisions." President Trump has pushed for more aggressive rate cuts than the Fed has delivered.

Additionally, the President’s most recent appointee, Stephen Miram, was the only Fed governor to vote for a 50-basis-point cut in September. However, pushing back on Deutsche Bank’s assertion is the fact that Trump appointees Christopher Waller and Michelle Bowman did not vote for a 50-basis point cut.

Still, some believe that Trump's influence could cause the Fed to lower rates faster than most expect, potentially increasing inflationary risk. This could provide another tailwind for gold.

Citing similar reasoning and geopolitical tensions, Swiss bank UBS increased its gold price target to $3,900 by mid-2026. UBS noted that real U.S. yields could turn negative. Additionally, the Australian ANZ Group sees gold going to $4,000 by June 2026.

Lastly, analysts at Goldman Sachs project gold will hit $4,000 by mid-2026. The bank also suggests that gold could move as high as $5,000. According to the firm, this would come if investors sold 1% of privately owned U.S. Treasury assets and bought gold.

Overall, these analysts predict a further upside in gold prices between 6% and 36%. Excluding Goldman’s bull-case forecast, the average of these targets implies an upside of around 8% in gold.

GLD, GDX, and GDX Offer Different Ways to Play Gold

The SPDR Gold Shares ETF is the most popular choice for straightforward gold price tracking. However, its 0.4% expense ratio slightly reduces returns compared to holding spot gold directly. Investors may be able to exchange higher upside potential for more risk using the VanEck Gold Miners ETF (NYSEARCA: GDX) and the VanEck Junior Gold Miners ETF (NYSEARCA: GDXJ). These funds provide exposure to a portfolio of gold mining stocks.

GDX focuses on the most prominent players in the space, while GDXJ focuses on smaller mining firms. Generally, GDXJ offers more upside potential but also more risk than GDX. However, the two have provided similar total returns over the past three years. GDX's total return sits at 214%, while GDXJ notched a 226% total return.

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