Gold is hovering just under a fresh peak after this week’s surge put spot prices within a short reach of the all-time intraday high set on Tuesday.

The rally is drawing fresh attention from Wall Street and the buy-side as Australia and New Zealand Banking Group raised its year-end target for gold to $3,800 per ounce, arguing that investment demand remains resilient and that the market could challenge $4,000 by mid-2026.

By late week, spot bullion was changing hands near $3,650, a short slide from Tuesday’s record around $3,674. That keeps year-to-date gains steep and extends gold’s outperformance against major bond and equity benchmarks since early summer.

Momentum has accelerated on a softer U.S. dollar, expectations for rate cuts, and steady official-sector buying, a combination that has pushed systematic and discretionary investors to add exposure on dips.

ANZ’s team lifted its 2025 year-end forecast to $3,800 from $3,600 and said prices could peak close to $4,000 by June 2026, framing the upgrade around persistent haven flows and still-tight physical markets.

The call follows a string of upward revisions across the street as the latest leg higher forced models to catch up with realized price action. UBS also marked its target up to $3,800 by end-2025 and $3,900 by mid-2026, underscoring a broadening consensus that the cyclical and structural supports for bullion are overlapping.

What is driving the bid

The macro backdrop continues to favor assets with lower policy sensitivity and higher perceived protection against tail risks. A softer run of U.S. data has nudged markets toward expecting the Fed to move off restrictive settings, a shift that typically eases real yields and reduces the opportunity cost of holding non-interest-bearing assets such as gold.

The latest inflation and employment readings cooled the most hawkish scenarios that were priced in over the summer that dynamic has kept bullion’s correlation with real rates unusually tight and helped explain why even modest declines in yields can trigger outsized moves in the metal.

Cross-currents that range from geopolitical flashpoints to uneven global growth have preserved a demand floor from investors who use gold as a hedge against market drawdowns and currency volatility.

Reports of ongoing central-bank purchases reinforce that base, especially in regions looking to diversify reserve composition. The result is a market where dips have been relatively shallow and short-lived, allowing trend followers to reengage quickly.

Tightness shows up most clearly when rallies coincide with bursts of coin and bar buying in selective markets and when scrap flows lag price strength, although both can fluctuate week to week.

What a $3,800 tape would mean for portfolios

If ANZ’s base case plays out, bullion at $3,800 would represent a fresh nominal high and cement 2025 as one of gold’s strongest calendar years on record that kind of move would amplify the metal’s hedging role against both inflation and growth shocks.

Allocators who traditionally cap gold at a low single-digit weight may find that percentage mechanically rising if they rebalance less frequently or let winners run, which in turn can keep passive buying in the system.

Systematic strategies that target volatility could also add exposure if the rally continues without a commensurate pickup in price swings.

Sustained spot strength near or above $3,600 can translate into widening margins despite cost inflation that has hit energy and labor.

Balance sheets across the senior producers have generally improved over the past cycle, leaving more flexibility to return cash to shareholders or pursue tuck-in deals. The caution is that equity investors will demand evidence that cost controls and capital discipline are sticking, especially after periods when input inflation outpaced realized prices.

ETFs that hold physical bullion have seen choppy flows through prior upswings, reflecting differences between institutional and retail behavior.

If the next leg higher is driven primarily by macro funds and official buyers, ETF volumes may not fully capture the strength under the surface.

A stickier inflation path that forces the Fed to stay restrictive would support real yields and the dollar, which is typically a headwind for gold.

A rapid easing of geopolitical stress or a sharp acceleration in global growth could also redirect capital toward risk assets and away from hedges. Finally, with positioning more crowded after the latest run, short-term reversals on profit taking are a feature of this tape, not a bug.

The overarching takeaway is that gold’s appeal is no longer tethered solely to inflation hedging or dollar weakness. It now reflects a broader demand profile that includes reserve diversification and portfolio insurance alongside traditional safe-haven flows.

As long as real rates drift lower and uncertainty remains elevated, the fundamental case that ANZ and other banks lay out has room to breathe. If those pillars wobble, the metal’s propensity for sharp mean-reversion will reassert itself just as quickly.