Melbourne– Gold could hit US$4,000 an ounce by the end of 2026 as the Federal Reserve lowers interest rates to cushion the US economy, the US dollar drops and central banks keep expanding holdings, according to Fidelity International.

Multi-asset fund manager Ian Samson said the firm remained bullish on the precious metal, with some cross-asset portfolios recently increasing holdings as prices eased from an all-time high above US$3,500 an ounce in April.

Spot gold was down 0.2 per cent at US$3,308.39 per ounce, as at 0024 GMT (8.24am Singapore time).

“The rationale for that was that we saw a clearer path to a more dovish Federal Reserve,” Mr Samson said in an interview, adding that some funds had as much as doubled their 5 per cent allocation over the past year.

Gold is up by more than 25 per cent in 2025, as uncertainty around US President Donald Trump’s aggressive attempts to reshape global trade, conflicts in the Middle East and Ukraine and central-bank accumulation buttressed gains.

Still, the metal has traded within a tight range over the past few months, with demand for havens cooling a little as some progress in US trade talks eased fears about worst-case-scenarios for the global economy.

“Perhaps you’re going to avoid the doomsday scenarios that were painted earlier in the year, but ultimately we’re heading to a 15 per cent-or-so tax on about 11 per cent of the US economy – which is imports,” Mr Samson said, referring to Trump’s tariffs.

“That’s a pretty decent tax hike. You’d expect it to slow the economy.”

Fidelity’s bullish outlook for gold is similar to that from Goldman Sachs Group, which has made the case in recent quarters for an eventual rally to as much as US$4,000 an ounce.

Still others are cautious, including Citigroup, which forecasts weaker prices.

Fed officials are due to gather this week to set policy. While no change is expected at this meeting, chair Jerome Powell may face dissents from officials who want to provide support to a slowing labour market.

A US slowdown would likely see the dovish camp gain more influence in guiding policy, with the US dollar tending to soften in environments of weaker growth, Mr Samson said.

In addition, Mr Powell – whose term as Fed chair ends in May 2026 – will probably be replaced by someone “more amenable” to lower borrowing costs as Mr Trump continues to lobby for interest rate cuts, Mr Samson added.

Non-yielding gold typically benefits when the US dollar softens and interest rates ease. 

Elsewhere, the world’s central banks are likely to go on buying gold, he said, while growing fiscal deficits – particularly in the US – would continue to reinforce the precious metal’s appeal as a hard asset.

“Sure, gold has come a long way, but if you look at when gold’s been in a bull market – like 2001 to 2011 – it annualised 20 per cent per annum,” Mr Samson said.

“From 2021 to today, it’s also annualising 20 per cent a year. So it’s not necessarily, in the context of a bull run, massively overstretched.” BLOOMBERG

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