(Kitco News) - Gold’s surging momentum has driven prices through $5,000 an ounce within the first month of the year, forcing many banks to play catch-up.
Société Générale is the latest international bank to announce a major upgrade to its gold price forecast. The French bank says that it now sees gold prices reaching $6,000 an ounce this year, up from its December forecast of $5,000 an ounce.
The analysts added that their current price target comes with a caveat: “This is probably a conservative estimate and it could well go higher.”
In their latest report published Monday, commodity analysts at SocGen said they expect investment demand to continue driving gold prices higher through 2026.
“While hedge funds don’t currently have outsized long positions, their notional holdings are at the highest level ever recorded, at $78 billion — $2 billion higher than the previous record held in September 2025,” the analysts said.
They noted that growing investment demand is having an outsized impact on price gains, meaning it will take less demand to drive prices higher.
“ETF flows into gold have been positive over the last eight weeks, with inflows of 93 tons, bringing total tonnage to 3,120 tons — 500 tons higher than one year ago,” they wrote. “This is the second-longest stretch of positive inflows since April 2025, when we saw 11 weeks of inflows. The impact on prices has become more pronounced in recent weeks. Since 2010, 100 tons of inflows into gold ETFs resulted in a price increase of 3.6%. Since October 2025, this is now measured at 9.2% and partially explains the 29% increase in gold prices since the start of October.”
However, the bank does see some slowing activity in an important segment of the gold market, as higher gold prices are taking their toll on central bank demand.
Although central banks remain net buyers, activity has slowed, according to trade data from the British HM Revenue & Customs.
“The November data showed a significant slowdown in export activity out of the U.K,” the analysts said. “Total exports amounted to just 19 tons to all destinations — well below the 127-ton average for November since 2022, and below the 61-ton average since 2015. China continues to account for the bulk of the activity, but exports to China were recorded at only 10 tons in November. This is far below the 51-ton average for this month since 2022 and below the 12-ton average since 2015.”
SocGen said that vault data from the London Bullion Market Association also confirms a slowdown in central bank gold demand.
“The relationship between gold export activity and changes in vault gold holdings is very tight,” the analysts said. “The December vault data from the LBMA pointed to a build of 199 tons. Historically, when we have seen such a build in gold vaults, export levels have been very low — sometimes as low as four tons for the entire month. Seasonally, we would have expected something closer to 100 tons based on average data from 2022. Indeed, looking at the 10 months with the largest gold inflows into LBMA vaults, we consistently observe low export activity — our proxy for central bank buying — averaging just 12.2 tons.”
