Gold’s rally may be over, according to a commodities expert who predicts prices to drop substantially late next year to well under US$3,000 an ounce.
Max Layton, global commodities head at CITI Research, predicts gold will trade at about $2,500 to $2,700 in the second half of next year, down about $900 or so less than where it is today.
“Our call is very much a 2026 bearish gold call,” Layton told BNN Bloomberg in a Thursday interview. “Near term, we have it averaging around $3,200 in the third quarter and $3,000 in the fourth quarter.”
Gold reached $3,382.40 per ounce Thursday and is up by more than 70 per cent over the past two years. Layton said CITI had been bullish on gold for the last couple of years as investors flocked to the precious metal. He said people are buying gold to hedge against a downside risks to their household wealth over fears of slowing economic growth and global uncertainty.
“The move from $2,600 to $3,300 this year has been all about investors buying bars and coins, particularly bars because they’re hedging against a downside in U.S. and global growth, as well as a downside in equities related to that downside in U.S. and global growth, which has come about because of the combination of still extremely high interest rates in the U.S. by historical standards, and the tariffs.”
He however expects a drop in prices due to weakening investment demand, anticipated U.S. interest rate cuts and improved economic prospects.
“We’re getting close to this One Big Beautiful Bill Act passing Congress,” said Layton. “We think that is going to mark a shift in sentiment towards U.S. growth and basically a slight reduction, or even a moderate reduction, or even possibly by the end of next year, heading into the mid terms with lower interest rates as well.”
The bill has a section citing “remedies against unfair foreign taxes.” It is expected to hit Canadians and international investors with a higher tax on dividends they received from U.S.-based investments, placing more money in American coffers to evidentially lead to growth in the U.S.“
This bill, the passing of it being net stimulatory for the U.S. economy, is going to reduce fears about growth and lead to a bit more positivity and a little less investment buying of gold,” said Layton. “With that, you basically unwind the primary driver of the last $700 move in the old price higher from $2,600 to $3,300.”
While CITI paints a bleak picture for gold prices, major financial institutions such as Goldman Sachs project prices to rise to $3,700 by late 2025 and $4,000 by mid-2006 thanks to robust central bank buying. Bank of America as well predicts prices to rise to $4,000 within 2026.
