A. SREENIVASA REDDY (ABU DHABI)
Gold is likely to stay range-bound in the second half of the year after its roller-coaster ride in 2025 and the first half of 2026, the World Gold Council (WGC) said in its half-yearly report.
Gold is currently down roughly 7% year-to-date, but this modest decline masks a sharp price swing. Building on last year’s positive price momentum, gold set 12 all-time highs, surpassing $5,500/oz intraday in late January amid heightened geopolitical risks and elevated options activity, before falling towards — and briefly dipping below — $4,000/oz in late June, the report said.
Looking ahead, the WGC said gold’s current price is broadly aligned with a global backdrop of moderate growth, cooling but still elevated inflation and expectations of further, but limited, central bank tightening.
Under these conditions, gold may trade within a range of plus or minus 5% around $4,100/oz during the second half of the year if current conditions do not materially change.
However, the report said gold could still resume its upward trend if there is a clear catalyst. Such a trigger could come from worsening economic or geopolitical conditions, a reversal in interest-rate expectations or increased participation from long-term investors.
In this scenario, the WGC said gold could move back towards $4,500/oz, but only a strong and clear signal may push it sustainably towards $5,000/oz.
On the downside, the WGC said gold has become more susceptible to pressure in recent months after its exceptionally strong 2025 performance, as many investors took profits or rebalanced holdings. Further headwinds could come from US dollar strength, rates rising beyond current expectations, stronger investor appetite for risk assets and technical factors.
The report said a positive US and global growth environment, especially if accompanied by lower geoeconomic risk, could prompt investors to increase exposure to risk assets at the expense of gold. A sustained reduction in geopolitical risk could also reduce gold’s risk premium.
Technical levels could also matter. The WGC said gold remains well above its two-year average after moving up rapidly once it surpassed $3,500/oz. If gold were to trade below around $3,860/oz, it could experience an additional leg down, the report said.
However, the report added that if gold were to decline by 10% to 15% from current levels, further downside would likely be limited because lower prices have historically triggered buying from consumers, longer-term investors and central banks.
At the same time, the WGC said financial market volatility and geopolitical risk generally contribute positively to gold’s performance. It noted that a 100-point monthly increase in the geopolitical risk index has historically pushed gold prices up by 2.5%.
Persistently higher inflation may also support gold, as the metal tends to catch up and outperform when inflation persists and pushes investors towards more effective hedges.
A shift back to more dovish interest-rate expectations would also likely benefit gold, the report said. While the market expects the US Federal Reserve to increase rates at least once before the end of the year, official projections remain split. The WGC said questions around Fed independence had shaken markets in early January and were among the factors behind gold’s rise, particularly because such issues can affect Treasury yields and the US dollar’s role in the global monetary system.
The report also pointed to “sticky flows” from long-term investors as a potential source of support. The gold market has benefited from structural shifts over the past two decades, including growth in emerging markets, the advent of gold ETFs, an increase in tail-risk events and central bank demand.
More recently, sovereign wealth funds, pension funds, endowments and other long-term asset owners have increased their participation, while a pilot programme in China last year enabled some of the country’s top insurance companies to invest in gold.
Central banks remain an important factor. The WGC said they have bought an average of 1,000 tonnes of gold per year since 2022. Although some central banks tactically sold or swapped gold in the first quarter of this year, initial estimates suggest they will remain consistent net buyers in 2026.
The WGC’s recent Central Bank Gold Reserves Survey also indicated continued official-sector appetite, with an increasing proportion of reserve managers expecting their own gold reserves to rise over the next 12 months.
Intraday analysis showed that much of gold’s movement was linked to activity during Asian and US trading hours. Many of the pullbacks occurred during US hours, while rebounds generally took place during Asian hours, highlighting the growing role of Asian investors and consumers in price discovery and direction, the report said.
The report said structural support from central banks and long-term investors may help limit downside, reinforcing gold’s role as a strategic and resilient asset in an uncertain global environment.