The precious metals market is experiencing a remarkable rally, with gold prices soaring to unprecedented heights that few analysts anticipated just months ago. As trading concluded Monday afternoon, gold was changing hands at over $4,100 per ounce, extending last week’s historic breakthrough above the $4,000 threshold. This extraordinary price movement has prompted major financial institutions to significantly revise their forecasts, with Societe Generale now projecting that gold could reach $5,000 per ounce by the end of 2026.
The French banking giant’s commodity research team released their latest analysis on Monday, outlining a bullish case for continued strength in gold prices. Their revised forecast represents a substantial upgrade from projections made just one month earlier, reflecting the accelerating pace of investment flows into the yellow metal and persistent uncertainty in global markets.
Rapid Price Appreciation Outpaces Earlier Projections
The speed of gold’s ascent has caught even seasoned commodity analysts by surprise. According to Societe Generale’s research team, gold prices reached $4,042 per ounce last week, landing just $276 below their bullish fourth-quarter 2026 forecast of $4,318 per ounce that they had published merely a month ago. By Monday morning, prices had climbed further to $4,072 per ounce, and by afternoon trading, gold had pushed above $4,100.
This rapid price appreciation, which saw gold gain nearly $300 in a matter of weeks, has compelled the analysts to reassess their medium-term outlook. The primary driver behind this revision centers on investment demand, which has proven considerably stronger than their initial models anticipated. The bank’s commodity strategists now confidently project that gold will reach the psychologically significant $5,000 per ounce level by the conclusion of 2026.
Exchange-Traded Fund Flows Exceed Expectations
A critical factor underpinning the revised forecast involves the remarkable strength of exchange-traded fund flows into gold products. The analysts noted that despite lacking complete transparency on hedge fund positioning and flows, they have observed what can only be characterized as extraordinarily robust positive ETF flows in recent weeks. These inflows have exceeded their original forecasts and represent a key component of the price surge.
The research team identified a strong statistical relationship between ETF flows and uncertainty levels, particularly following the Trump victory in November 2024. They believe this correlation has become a critical factor in understanding recent price action in the gold market. Investors appear to be responding to elevated uncertainty by increasing their allocations to gold as a safe-haven asset.
Geopolitical Tensions and Trade Policy Uncertainty
The analysts pointed out that the latest monthly Federal Reserve Economic Data uncertainty indices from September fail to capture several significant recent developments. Most notably, these indices do not reflect China’s comprehensive export controls on rare earth elements announced on October 9th. Rare earth metals are critical components in numerous high-technology applications, and export restrictions carry significant implications for global supply chains and international trade relations.
Furthermore, the uncertainty indices cannot account for President Trump’s announcement last Friday imposing additional 100 percent tariffs on all Chinese goods, followed almost immediately by signals of openness to negotiating a deal to reduce trade tensions. This rapid sequence of policy announcements and reversals exemplifies the volatile and unpredictable nature of current trade policy, which continues to drive investors toward safe-haven assets like gold.
Interestingly, the Societe Generale team observed that in China, the general uncertainty index and trade uncertainty index both dropped by 80 and 100 points respectively during September. Despite this reduction in measured uncertainty, Chinese gold ETF holdings increased from 189 tonnes to slightly over 193 tonnes, suggesting that Chinese investors maintained their appetite for gold regardless of improving sentiment indicators.
United States Uncertainty Metrics Show Different Picture
In contrast to the declining Chinese uncertainty measures, the bank’s preferred weekly United States uncertainty index, which captures the period encompassing China’s rare earth export control announcement and Trump’s tariff response, showed a sharp increase. The uncertainty level jumped to 354, representing an increase of 18 points over the week and 44 points over the month. Significantly, this level of 354 remains approximately three times higher than the levels witnessed during the five months preceding the United States presidential election.
This elevated uncertainty has translated directly into investment flows. Global gold ETF flows increased by 23 tonnes over the last week alone and by a substantial 100 tonnes over the past month. The analysts highlighted that their China economics team estimated less than a 30 percent probability of the newly announced tariffs actually materializing. However, these scenarios, whether realized or not, appear to trigger massive flows into gold ETFs as investors seek protection against potential outcomes.
The research team stated they cannot envision a scenario where uncertainty returns to pre-Trump levels within their forecast horizon, making ETF flows a key component of their price forecasting methodology.
Historical Context and Flow Analysis
Societe Generale maintained the core assumptions from their September forecast regarding the fundamental drivers of gold demand. Their earlier analysis presented the case for extremely resilient gold investor and central bank demand. Since 2022, the average quarterly increase in flows across all managed money, ETFs, central banks, and demand for coins and bars has been 72.5 tonnes. For ETFs specifically, where near real-time transparency on flows exists, quarterly changes have averaged positive 31.5 tonnes since 2017.
However, the bank observed a highly significant 100 tonnes of flows into global gold ETFs through the end of the third quarter, representing 69 tonnes more than what they consider “normal” levels. This single flow component partially explains the significantly increased gold price during September. These elevated ETF flows represent the highest levels witnessed since the third quarter of 2020, when positive flows reached 238 tonnes during the economic uncertainty surrounding the global pandemic.
These elevated ETF flows substantially exceeded the bank’s original flow assumptions and explain, according to their analytical framework, roughly $160 per ounce of the price increase over the past three months.
Conservative Forecasting Methodology
Despite the recent surge in investment demand, the Societe Generale analysts emphasized they continue taking a conservative and cautious approach to flow forecasting. They are only assuming an additional 67 tonnes of gold purchases each quarter above “normal” levels across all categories of flows, including central banks and ETFs, for all quarters through their forecast horizon.
This conservative assumption persists despite the recent elevated uncertainty environment. The analysts maintain their view that central banks will continue accumulating gold to increase its percentage in their total reserve holdings. Central banks worldwide have been consistent buyers of gold as they seek to diversify their reserve assets away from traditional currencies.
By adding this incremental amount to average demand and incorporating it into their model framework, the analysts recalibrated their gold price forecast. Marking to market from the current gold price while leaving underlying assumptions unchanged, their model points to $4,217 per ounce by the end of 2025 and $5,000 per ounce by the end of 2026. This represents a 14 percent increase from their September forecast of $4,300 per ounce.
Risk Assessment and Market Outlook
The analysts explicitly noted that given their conservative assumptions on ETF and central bank flows, they view the upside risk to their forecast as significantly greater than the downside. In other words, they believe gold prices are more likely to exceed their $5,000 target than fall short of it, should investment flows continue at current elevated levels or accelerate further.
As Monday’s trading session progressed, spot gold continued its upward trajectory, rising further above the $4,100 per ounce level. The precious metal set a fresh all-time high of $4,117.42 just before 1:30 pm Eastern Daylight Time, underscoring the sustained buying pressure in the market.
This remarkable bull run in gold prices reflects a confluence of factors including geopolitical tensions, trade policy uncertainty, elevated global economic uncertainty, strong investment demand through ETFs, continued central bank buying, and gold’s traditional role as a safe-haven asset during periods of instability. As these conditions persist and potentially intensify, the path toward $5,000 gold appears increasingly plausible within the Societe Generale analysts’ forecast horizon.
Acknowledgment: This article was written with the help of AI, which also assisted in research, drafting, editing, and formatting this current version.
