Morningstar analysis offers contrarian view on gold, sees $1,820 in five years

Despite gold’s record-breaking rallies and banks doubling down on their bullish price forecasts, one analyst has a contrarian take on where the precious metal stands long term.

According to David Sekera, Morningstar’s chief US market strategist, gold could eventually fall back down to around $1,820 an ounce, a level last seen in October 2023.

This prediction, said Sekera in a Bloomberg interview this week, follows an analysis by the firm’s equity research team into the long-term supply and demand of the metal, taking into consideration the extraction cost of gold over the next five years.

“When we look at gold, it certainly has had an incredible momentum rally over the past year, but what I’m looking at is what’s going on in the market, those factors that have historically resulted in higher gold prices are starting to wane,” said Sekera.

“If I look at real interest rates, that’s always been a big predictor of gold prices; those are positive here in the US, and in fact, we expect real interest rates to probably become even more positive over the course of the next year,” he added.

As for inflation, which is often linked to rising gold prices, Sekera said he expects that to moderate in the US, getting down to the Fed’s target by the end of this year and going into 2026.

Sekera’s call comes on the back of gold setting a new record of $3057.31 per ounce on Wednesday, after US policymakers projected slower growth and higher inflation in the US. In 2025, the gold price has gone up by 16%, extending its run from last year.

Demand-supply dynamics

In explaining his bearish view on gold, the Morningstar strategist cited an old adage in the commodity space: “The cure for high prices is high prices.”

“So in this case, over time, we would expect to see demand destruction for gold,” he predicted, noting that half of the metal’s production is for jewelry, where there is expected to be a “substitution effect” in the coming years. Also, about 10-15% of gold is used for industries, and again, in these cases, manufacturers are expected to substitute into other materials to save costs, Sekera said.

On the supply side, Sekera expects new mines to enter production, though he said “it may take a couple of years” for these to come online as well as to build out new reserves.

Lastly, the he pointed out the cost-cutting measures being carried out by the newly created DOGE (Department of Government Efficiency) under the Trump administration will have an impact on commodity prices.

“Again, it may take the next several years for those to work through, but this does really predicate our long-term gold forecast,” Sekera said. He emphasized that its $1,820 price target will be for the next 4-5 years.