Qatar National Bank (QNB) expects further upside for gold over the medium and long term, despite the sharp rally in recent months and the significant risks of short-term corrections.In its Weekly Economic Commentary, QNB stated that consensus among leading research houses suggests gold prices are likely to remain well supported at around USD 4,000 per troy ounce, with an estimated upside of 10–15% over the next twelve months.Gold has once again proven its value in providing robust returns during periods of global uncertainty. In fact, it has been one of the standout global asset classes in recent years, consistently demonstrating remarkable resilience. Since the post-pandemic normalization in 2022, gold prices have gained around 105%, significantly outperforming most global benchmarks, including equities, bonds, and commodities.This broad-based outperformance underscores gold’s unique position as both a store of value and a macro hedge in an era defined by three converging structural forces: strong global growth in money supply, geopolitical fragmentation, and central bank reserve diversification.Since the onset of the pandemic, an unprecedented expansion of fiscal and monetary policy has undermined confidence in the stability of currencies in major advanced economies. At the same time, a series of geopolitical shocks — from the U.S.-China strategic rivalry to conflicts in Eastern Europe — have fueled demand for safe and jurisdictionally neutral assets. Furthermore, the steady accumulation of gold by emerging market central banks, often as a deliberate strategy to reduce dependency on established reserve currencies, has added a new layer of sustained, price-insensitive demand.Gold appears “fairly” priced, if not undervalued, against USD money supply (M2). Since the Bretton Woods agreements of 1944, which established the post-Second World War economic order, the USD long-term price of gold has tended to move directionally in line with M2 growth. Much of the recent upward movement in gold prices could therefore be seen as a catch-up following a long period of undervaluation since 2010, combined with continued strong USD issuance. Current prices would still need to rise by approximately 34% to reach QNB’s modeled fair value. Importantly, M2 has been accelerating in recent years, growing at a compound annual rate of 7.5%. In other words, there are no clear signs of overvaluation, and one of the main drivers of prices — USD issuance — continues to expand rapidly.Positioning by both central banks and private investors in gold also suggests further potential for price appreciation. Geopolitical fragmentation continues to amplify gold’s appeal as a jurisdictionally neutral asset outside the reach of financial “weaponization.”According to the World Gold Council, following the outbreak of the Russia-Ukraine conflict in 2022, central banks’ additional demand for gold more than doubled — from around 450 tons per year to over 1,000 tons per year. Despite this increase in official demand, there remains considerable room for a longer-term accumulation trend. While large advanced economies tend to hold around 25% of their foreign exchange (FX) reserves in gold, major emerging-market central banks hold less than 12% of their FX reserves in the metal.
