Today's Edition
A.SREENIVASA REDDY (ABU DHABI)
Gold, which has returned more than 60% so far this year, may continue its strong run into 2026 depending on how global economic and geopolitical risks evolve, the World Gold Council (WGC) said in its Gold Outlook 2026 report. The metal has hit more than 50 all-time highs this year, supported by heightened geopolitical and economic uncertainty, a weaker US dollar and strong price momentum.
Gold is on track to close 2025 as one of the best-performing global assets, marking its strongest year in more than four decades, said Farhan Badami, Market Analyst at eToro. “Central banks look set to keep accumulating bullion as they hedge against currency and inflation risks. That steady official demand remains a strong anchor for prices, and $5,000 is not off the table,” he said.
The WGC report says the current gold price largely reflects market consensus expectations and may remain rangebound if those conditions persist. However, it notes that 2026 could again “surprise”, just as 2025 did, depending on global growth, interest-rate paths and geopolitical tensions.
Under a scenario of cooling economic conditions — labelled a “shallow slip” — gold could rise 5% to 15% in 2026 as lower interest rates, a softer US dollar and increased risk aversion support demand. Continued strategic central-bank buying and new institutional entrants, such as insurance companies in China or pension funds in India, could add to this momentum.
In a more severe downturn — the “doom loop” scenario — marked by a deeper global slowdown and elevated geopolitical risk, gold could gain 15% to 30%. This would be driven by falling yields, broad flight-to-safety flows and strong investment demand, particularly through gold ETFs. Global gold ETFs have already seen $77 billion of inflows this year, adding over 700 tonnes to holdings and approximately 850 tonnes since May 2024.
Conversely, if policies under the Trump administration lead to stronger-than-expected economic growth and higher yields — a scenario the WGC calls “reflation return” — gold prices could decline 5% to 20% from current levels as investors rotate back into risk assets and the opportunity cost of holding gold rises.
The WGC also highlights “wildcards” that could influence gold next year, including central-bank behaviour and recycling trends. Emerging-market central banks continue to hold far less gold than developed-market peers, leaving room for further official-sector accumulation should geopolitical tensions escalate. However, a significant slowdown in purchases or an increase in secondary supply — for instance from liquidations of gold-backed loans in India — could act as headwinds.
The WGC concludes that the forces of softer growth, accommodative policy and persistent geopolitical uncertainty are more likely to support gold than undermine it. “Gold’s capacity to provide diversification and downside protection remains as relevant as ever,” the report said.
Looking ahead, Badami said the key question for 2026 is not whether gold will maintain its safe-haven appeal, but how high prices could climb if volatility persists. “The macro forces that propelled gold to all-time highs in 2025 show little sign of easing, setting the stage for another year in which investors continue to seek comfort, stability and protection in the world’s oldest safe haven,” he said.
