Doha: Qatar National Bank (QNB) has projected a continued rise in gold prices over the medium- and long-term, despite recent sharp rallies and potential short-term corrections.

According to Qatar News Agency, QNB's Weekly Economic Commentary suggests that leading research houses anticipate gold prices to stabilize around USD 4,000 per troy ounce, with an estimated upside of 10-15% over the next twelve months. Gold's ability to deliver strong returns during global instability has been proven once again, with its performance outshining most global asset classes. Since the post-pandemic normalization in 2022, gold prices have surged by approximately 105%, significantly outperforming equities, bonds, and commodities.

This impressive performance highlights gold's dual role as a store of value and a macro hedge amid three major structural forces: increased global money supply, geopolitical fragmentation, and central bank diversification of reserves. The pandemic triggered unprecedented fiscal and monetary expansions, eroding confidence in the stability of currencies from major advanced economies. Concurrently, geopolitical tensions, such as the US-China strategic rivalry and Eastern European conflicts, have increased the demand for safe, jurisdictionally neutral assets. Additionally, emerging market central banks have steadily accumulated gold, often as a strategy to reduce dependency on traditional reserve currencies.

QNB notes that gold appears "fairly" priced, if not undervalued, when compared to USD money supply (M2). Historically, the long-term USD price of gold has been directionally aligned with USD M2 growth, dating back to the Bretton Woods agreements of 1944. Recent movements in gold prices may reflect a correction from a period of undervaluation since 2010, alongside continuous USD issuance. Current prices would need to rise by about 34% to reach QNB's modelled fair price, as M2 has been expanding at a compounded annual rate of 7.5%. There are no clear signs of "overvaluation," and USD issuance continues to grow rapidly, driving prices higher.

Investor and central bank positioning in gold suggests further potential for price appreciation. Geopolitical fragmentation enhances gold's attractiveness as a jurisdictionally neutral asset, beyond the reach of financial "weaponization."

According to the World Gold Council, following the Russo-Ukrainian conflict in 2022, central bank demand for gold more than doubled from 450 tons per year to over one thousand tons per year. Despite this surge in official demand, there remains significant room for extended gold accumulation. While central banks in large, advanced economies typically hold around 25% of their foreign exchange reserves in gold, their counterparts in large emerging markets hold less than 12% of their reserves in the precious metal.