Morgan Stanley: Gold Hits $4,450 Target Price, Central Bank Buying and Fiscal Concerns Provide Support

Morgan Stanley's August 20 research report noted that gold has reached its Q4 target price of $4,450 per ounce. From July to August, declining odds of Fed rate hikes drove net inflows of 70 tons into gold ETFs, reversing the net outflow of 93 tons seen from May to June. The People's Bank of China has purchased 60 tons of gold this year, the highest since 2023; Poland increased its holdings by 82 tons, bringing total holdings to 632 tons, approaching its 700-ton target.

Morgan Stanley believes gold prices are decoupling from the real interest rate framework, with sustained central bank buying, COMEX short positions falling to their lowest since April 2020, and fiscal concerns behind the steepening yield curve forming a new structural support. Gold prices are expected to break above $5,000 per ounce by 2027, but US inflation data remains the primary short-term volatility risk.

[TechFlow]