With gold hovering around $3,121 an ounce, it’s easy to assume the only way is up.
But RBC Capital Markets is urging a more measured view.
Yes, the price has surged to all-time highs, fuelled by geopolitical fears, trade tensions and the nagging threat of a global recession.
But the bank warns that gold’s rally is being driven less by hard economic data and more by the jittery mood of the market.
In its latest strategy note, RBC upgrades its gold price forecasts across the board. Its base case now assumes an average price of $3,039 for 2025, rising to $3,195 in 2026.
The high-end scenario has gold peaking at $3,496 by year-end. But there’s a catch: for that kind of surge to happen, bad vibes won’t be enough. “Soft data” like falling business confidence would have to harden into weaker employment, output and investment numbers.
Investor sentiment is shifting. Flows into gold exchange-traded funds (ETFs) are picking up again, and RBC says more money could enter the space as investors look for a hedge. But many are still hesitant to buy in at record highs.
A modest pullback could tempt them off the sidelines. Otherwise, the next leg higher would need a clear economic downturn to really kick it into gear.
Trade tensions (especially tariffs) remain a key driver. If things escalate, RBC expects gold to benefit. But that also means gold’s current strength is tied to events that are, by nature, unpredictable. Uncertainty is the fuel, but it’s also the risk.
On fundamentals, gold still looks pricey. Long-term models suggest it could be overvalued, with fair value closer to $2,300. That doesn’t mean prices are about to collapse, but it does mean today’s levels are tough to justify without continued turmoil.
RBC sees two key triggers for further gains. First, a period of consolidation that would bring in investors waiting for a dip. Second, a deeper shift from “vibes” to actual recessionary data, something that could unleash a fresh wave of risk-off buying.
In short, RBC still likes gold. But it’s not ready to declare liftoff just yet. The rally has legs, but only if the world’s nerves keep fraying—and that, ironically, is the one thing no one can predict.