WGC says gold is likely to remain range-bound unless new risks spark another rally.
Dubai: Gold buyers may see some relief in the second half of 2026 after prices eased from January’s record highs, though the metal could still move higher if geopolitical tensions intensify, interest rate expectations shift, or bargain buying picks up strongly, according to the World Gold Council.
Gold experienced one of its most volatile starts to the year, surging above $5,500 an ounce intraday in January before easing below $4,000 in late June. The metal is now down around 7% year-to-date, though it remains among the strongest-performing major assets over the past 12 months.
The World Gold Council said gold is currently broadly aligned with a global environment of moderate growth, easing but still elevated inflation, and expectations of further but limited central bank tightening. Under these conditions, gold is likely to trade within a range of about 5% either side of $4,100 an ounce in the second half of the year.
This suggests prices could stabilise after months of sharp volatility, although the outlook remains sensitive to sudden shifts in investor sentiment.
Buyers watch for dips
The sharp decline from January’s peak has offered some relief to consumers who had delayed purchases when gold was trading near record highs.
The World Gold Council (WGC) noted that current price levels do not indicate a full correction, but rather a market waiting for its next catalyst. A weaker economic outlook, renewed geopolitical shocks, falling interest-rate expectations, or strong dip-buying could push gold back towards $4,500 an ounce or higher.
A stronger upside trigger could lift prices further, while resilient growth, higher yields, and calmer market conditions could keep gold under pressure.
The report added that a drop of more than 10% from current levels may be limited by bargain-hunting demand, with consumers, long-term investors, and central banks historically stepping in during deeper pullbacks.
Fed rates remain key
Interest rates continue to be one of the most important drivers for gold. Higher rates increase the opportunity cost of holding gold, as the metal does not generate interest or dividends.
The World Gold Council (WGC) said bond markets and consensus expectations still point to further policy tightening before year-end, including a possible Federal Reserve rate hike by October. Any shift back toward expectations of lower rates would likely support a recovery in gold prices.
The report noted that a 25-basis-point decline in the US 10-year Treasury yield could lift gold prices by about 1.75%, all else being equal. Inflation also plays a supportive role, with a 1% rise in consumer prices associated with roughly a 0.5% increase in gold under the World Gold Council’s framework.
Geopolitical risk is also a key driver of gold prices. The World Gold Council said a 100-point monthly rise in its geopolitical risk index has historically led to a roughly 2.5% increase in gold prices.
Asia supports gold
One of the most notable trends in the first half of the year was the increasing influence of Asian markets in gold price discovery.
The WGC noted that many of gold’s declines occurred during US trading hours, while recoveries were typically seen during Asian trading sessions. This suggests stronger support from Asian investors and consumers, particularly during price dips.
Robust Asian buying during downturns could limit the depth and duration of price declines, especially during wedding and festive seasons across the region.
Central banks remain a wildcard
Central bank demand continues to be a key support for gold. Official institutions have purchased an average of around 1,000 tonnes annually since 2022, helping underpin long-term demand.
The World Gold Council (WGC) said central banks are still expected to remain net buyers this year, although the pace of purchases remains uncertain. Its latest survey indicates more reserve managers expect their gold holdings to increase over the next 12 months.
The council estimates that an additional 20 to 30 tonnes of buying above the long-term average could lift gold prices by roughly 1%, all else being equal. Conversely, a clear slowdown in central bank purchases would put downward pressure on prices.
India demand may soften
India, the world’s second-largest gold market, could also play an important role in shaping the outlook for the second half of the year.
The World Gold Council (WGC) said India has introduced measures to moderate gold imports amid pressure on the rupee and foreign exchange reserves. Import duty has been raised from 6% to 15%, alongside official efforts aimed at discouraging gold purchases.
The council estimates that the duty hike alone could reduce jewellery, bar, and coin demand by 50 to 60 tonnes, or about 10% year-on-year. While much of this impact may already be reflected in prices, weaker domestic growth could further dampen demand if consumers delay purchases during price dips.
What it means for shoppers
The second half of the year could offer a more favourable buying window than the first, particularly if prices stay close to current levels and avoid another surge driven by geopolitical tensions or shifts in interest-rate expectations.
The risk is that gold’s downside could remain limited, as central banks, Asian buyers, and long-term investors may step in whenever prices dip. The World Gold Council said gold is likely to stay range-bound under current macroeconomic expectations, though the market still has clear catalysts that could trigger a breakout.
