Morgan Stanley continues to favor gold over a 12-month horizon despite the metal’s recent drop below $4,200 and roughly 3.8% decline in 2026. Amy Gower, the bank’s metals strategist, said persistent physical demand, the possibility of lower long-term bond yields and falling oil prices could support bullion. Central banks bought a net 23 metric tons in July, including about 20 tons from China, while Chinese gold imports exceeded 1,000 metric tons in the first eight months of 2026, putting demand on pace for its strongest year since at least 2017. Morgan Stanley views $4,000 as a meaningful support level and previously raised its 2026 gold forecast to $4,400. The U.S. 10-year Treasury yield recently rose above 5.3%, increasing the opportunity cost of holding non-yielding gold. Lower crude prices could ease inflation pressure, reduce expectations for further Federal Reserve tightening and eventually pull long-term yields lower. U.S. PCE inflation cooled to 3.4% in August, while upcoming jobs and CPI data remain key tests before the Fed’s October 27-28 meeting. Deutsche Bank analyst Michael Hsueh has warned that three to four Fed rate hikes could push gold toward $3,800.