Gold fell back. It is evident in the numbers. Having been on a run of consecutive rises since early 2026, Gold price rally took a sharp downturn in March to hit an intra-year low of around USD4,170 an ounce. Consumers were worried. Economists were intrigued.
This Focus Pakistan piece considers the numbers, the forecasts from institutions, and the structural factors behind answering the question that this dip asks: Is this the end of the Gold price rally or the best setup for gold yet?
What the World’s Largest Banks Are Actually Saying
The institutional view on the path of gold price rise until 2026 is remarkable in its scope and scale of ambition. Not for nothing – it comes from some of the world’s most influential financial institutions:
- J.P. Morgan sees the average price at USD6,000 per ounce by Q4 2026, with potential of USD6,300 by end-of-2027
- Goldman Sachs aims at USD4,900 by year-end – even without any Fed rate cuts in their calculations
- Wells Fargo expects a year-end price range of USD6,100–6,300
- Bank of America sees a target price at USD6,000 in 12 months’ time, with Michael Widmer from this bank seeing USD8,000 by 2027 under an extreme demand scenario
- UBS sees the structural bull market in gold intact, with an upside scenario at USD7,200 in case of increased geopolitical risks materializing
When the year 2025 began, institutional views were centered on the range of USD2,800 to USD3,200 an ounce. As we move into mid-2026, they are now projecting between USD5,400 and USD6,300. The reason for this is not that they are simply “price chasing.” It is because there has been a fundamental re-assessment of the factors underlying demand for gold.
The Central Bank Narrative the Press Continues to Get Wrong
- The key point in the bull story of the gold rally 2026 focuses on the central banks – and these figures need to be understood carefully.
- For the first time since 1996, gold represents a bigger portion of the central bank reserves than US Treasury bonds.
Initial numbers indicated that buying by the central banks had slowed down in early 2026. Net reported acquisitions of gold stood at just 16 tons in Q1 2026, which reflected a sudden slowdown in momentum. Several analysts doubted the underlying story. They were missing out on the numbers below the surface.
Based on the alternative data derived from London’s OTC market and the trade flows witnessed from Swiss refineries, the World Gold Council estimated that the total gold demand in Q1 2026 was higher than in Q4 2025, which stood at 244 tons as opposed to 208 tons respectively. The total net imports of gold by China were recorded at 317 tons in Q1 2026.
But why would China continue to buy at these high prices? The reason is not financial, but strategic.
In light of geopolitical risks, central banks have turned to gold to reduce the risk of any sanctions. Gold is owned by central banks and stored in their national vaults and is not stored with Western financial organizations under Western jurisdictions.
The precedent set by the freezing of the Russian central bank’s gold reserves in 2022 has changed the entire risk equation. For emerging-market central banks, gold is no longer merely an asset reserve but insurance against a dollar-centric world.
ALSO READ: Pakistan Gold Imports Decline Nearly 48% This Year
The Slowing Decline of the Dollar The Most Forceful Tailwind for Gold
The second underlying factor behind the 2026 bull case for gold is the dwindling proportion of the US dollar as the world’s reserve currency. Here, the statistics speak clearly and loudly.
Since 1999, the dollar’s share in global foreign exchange reserves has fallen from 71% to around 57% currently – the lowest percentage since 1994.
Including gold, if valued at market value, in the portfolio of reserve assets would further reduce the dollar’s share in global reserves from 54.8% of global foreign exchange reserves to 48.2%.
There are three structural factors speeding up this process:
Sanctions weaponization: The freeze on Russia’s dollar holdings in 2022 sent a clear message that there is political risk in dollar reserves not inherent to physical gold stored at home. The survey data paints an unambiguous picture of the central banks’ incentives: 73% of respondents see the dollar’s share of global reserves to fall modestly or considerably within five years, whereas 84% view geopolitical fragmentation and sanctions risk as key motivators for dollar de-pegging policies.
Petrodollar weakening: Saudi Arabia decided not to extend its petrodollar deal in June 2024 – the half-century-old practice where Gulf countries pegged their oil prices to the dollar and invested surpluses into US Treasury bonds. China News Service
Recomposition of reserves: Morgan Stanley calculates that the share of gold in world reserve assets increased to around 25-28 percent, as compared to 14 percent before.
Five Factors Creating the Bull Thesis of USD6,000
The USD6,000 bull thesis is completely in line with the base case scenario for J.P. Morgan and Wells Fargo. Five factors that can be considered structural in nature are listed below for the bull thesis:
Central Banks as the Price Floor
Price Inelastic Central Banks keep adding to gold holdings as the demand from central banks is continuing and thus keeps increasing the price floor. It is the 17th year of net central bank purchases post Global Financial Crisis. Wolf Street
Structural weakness of the dollar
Dollar weakness can be seen in the context of lower rates, lower neutral interest rates under new Federal Reserve leadership, higher term premium due to increased fiscal risk, and improved balance sheet management policy – all of which favor the dollar weakness. It can directly increase the positive sentiment towards gold and improve its price and purchasing power globally. Wolf Street
Asian demand without other options
On the whole, Asia’s demand will play a vital role in the gold investment, considering geopolitical risks around the world. The program of Chinese insurance companies’ pilot project, where 10 insurance companies were allowed to invest 1 percent of total assets into gold, is growing – and if PBC (People’s Bank of China) increases these limits, institutional demand will get an additional boost. Yahoo Finance
Supply cannot keep pace with increased demand
Higher prices mean better profits for gold producers, who managed to grow gold mining supply by only 0.3% annually since 2018. Super-cycle of gold mining investments is unlikely for structural reasons related to the permitting processes. If demand increases and supply cannot do the same, the price will increase.
For the bull thesis to break, a combination of events needs to happen; an abrupt hawkish stance by the Fed, a rally in the dollar index, easing tensions in geopolitics, and speculation-led profit taking. All of which are possible on their own.
The year-end 2026 target at Goldman Sachs is lowered to USD4,900 from USD5,400 in June, mainly due to the absence of rate cuts in its baseline scenario. Nevertheless, without any easing, the firm aims for USD4,900 and believes the medium-term risk to be skewed to the upside. The structural buyers have not gone away. It was only the speculative near-term element that stepped aside, and it will come back.
Pakistan is right where all the influences on the rising gold price story meet. Pakistan is importing its fuel in dollars and has external debts denominated in dollars, along with having an economy that depends very much on global commodity cycles.
The families in Pakistan have invested in gold generation after generation; it is a socio-cultural aspect that has similar logic working at a macro level that has brought institutional demand across the world. With the rupee moving contrary to the gains of gold prices denominated in US dollars, there has been an opportunity to invest in gold for those holding gold in Pakistan.
Considering that the share of dollars in reserves is declining structurally, central banks have bought gold at an all-time high pace, and a USD6,000 target represents the consensus among institutions rather than being an outlier projection, the only question for investors in Pakistan should be whether they want to get on board with this Gold price rally . Or not.
Nayab Fatima is a media professional specializing in fact-based journalism, research, and analytical reporting on technology, telecom, aviation, and automobiles.
