Morgan Stanley sees gold at $5,200 (Central bank buys, Fed cuts), fear trade is now dead
investingLive • • business
Key Points:
- Morgan Stanley has set a gold price target of $5,200 per ounce for later this year, driven by resumed ETF and central bank purchases, China’s renewed reserve accumulation, a weakening US dollar, and expected Federal Reserve rate cuts in early 2027.
- Since the Iran conflict began, gold has fallen 14.5%, underperforming global equities and the S&P 500, as the metal has reacted more to real interest rates and monetary policy than to geopolitical tensions.
- Elevated oil prices from the conflict have increased inflation fears, reducing expectations for Fed rate cuts, pushing real yields higher, which raises the opportunity cost of holding gold and weighs on its price.
- Central banks and ETFs paused or reversed gold purchases after the conflict started, removing a key structural support and amplifying the rate-driven selloff.
- Morgan Stanley concludes gold is now primarily a real rates trade rather than a safe haven asset, signaling a fundamental shift in how investors should view and position gold amid geopolitical crises.
