Gold Outlook 2026: Push ahead or pull back

Our Gold Return Attribution Model (GRAM) – summarised in Chart 3 and Table 1 – indicates that the high-risk environment explains roughly 12 percentage points of gold’s y-t-d return, primarily driven by geopolitical risk. Reduced opportunity cost – through a weaker US dollar and marginally lower rates – contributed another 10 percentage points.

Within the two factors above, the combined effect of heightened geopolitical risk and US dollar weakness accounted for roughly 16 percentage points. This underscores the outsized influence of politics and macro uncertainty on gold’s performance so far during Trump’s second term.

Further, price momentum and investor positioning contributed nine percentage points, while economic growth added 10 points. 

Notably, the contributions of the four main factors that drive gold have been unusually balanced this year (Table 1). This signals a market driven by diverse forces rather than a single catalyst. Having said that, momentum has played a larger role than in previous years, which is not surprising considering how gold’s strong rally has prompted widespread investor interest.

What to expect in 2026

Looking ahead to 2026, markets are largely pricing in a continuation of the status quo, but divergences in macro data laden with a heavy geoeconomic blanket, mean that uncertainty will remain high. Concerns about a softening US labour market are mounting, while debates persist over whether inflation will stay stubbornly high or face renewed upward pressure. At the same time, and despite some progress, geopolitical frictions continue to simmer.

What does this mean for gold? Much like this year, unforeseen events – such as Liberation Day – are impossible to anticipate. Still, while their exact nature is unpredictable, the frequency of tail risk events is on the rise (Chart 4).³ Whether such developments trigger risk-on or risk-off sentiment could play a decisive role in shaping performance across asset classes and gold’s role as a strategic diversifier.

What macro consensus tells us

The gold price today largely reflects macro consensus expectations related to economic growth, inflation, and monetary policy.⁴

This is captured by the rangebound performance shown by our Gold Valuation Framework when we input market consensus variables (Table 2). Namely:

• Global GDP growth remains stable and broadly in line with trend (2.7% – 2.8% y/y in real terms)
• Around 75bps of additional rate cuts from the Fed, and a core CPI/PCE fall of roughly 40–60 bps by year-end
• The US dollar edges higher, and yields stay broadly flat.

But, as history shows, the macroeconomy rarely follows the path that market consensus dictates. 

As such, we analyse the conditions that would push gold moderately higher (a shallow slip), significantly higher (the doom loop), and those that would prompt a notable pullback (reflation return).

A shallow slip

US economic data has been mixed, but market participants are concerned that momentum may be slowing. As risk appetite declines, positioning shifts to defensive assets. 

Within this environment, a potential reset in AI expectations could act as an additional drag on equity markets, especially since AI names carry significant weight in major indices, amplifying market volatility and encouraging further de-risking.

This may result in a softer US labour market as record-high margins contract, which would prompt weaker consumer activity and contribute to a broader global growth slowdown.

Against this backdrop, the Fed would likely cut rates beyond current expectations, easing policy in response to rising economic uncertainty and expectations of cooling inflation.

Impact on gold: moderately bullish 

The combination of lower interest rates and a weaker dollar paired with heightened risk aversion would create a continued supportive environment for gold. 

Our analysis shows that, in this environment, gold could rise 5% – 15% in 2026 from current levels,⁵ depending on the severity of the economic slowdown, and the speed and magnitude of the rate cuts.⁶

This would represent a solid return in a normal year, but following 2025’s strong performance, it would still be considered a noteworthy follow-up.

The combination of lower interest rates and a weaker dollar – both of which remain cyclically high (Chart 5) – have historically been a source of support for gold. 

In addition, continued strategic central bank buying and potential new investment entrants, such as insurance companies in China or pension funds in India,⁷ could further support gold’s positive trend even if the economic environment remains relatively benign.

The doom loop

There is a non-zero chance that the global economy moves into a deeper and more synchronised slowdown,⁸ driven by rising geopolitical and geoeconomic risk. Tensions around trade, unresolved regional conflicts, or a new flashpoint may erode confidence and weigh heavily on global activity. These pressures would contribute to a more fragmented global environment and heighten risk sensitivity across trade and investment.

As confidence fades, businesses scale back investment and households pull back on spending, setting off a self-reinforcing “doom loop” that deepens the downturn. US growth weakens further, and inflation falls below target, prompting the Fed to cut rates aggressively. Long-term yields decline sharply, and the US dollar softens as policy eases, contributing to softer global trade and broad commodity weakness.

Impact on gold: bullish

This combination of falling yields, elevated geopolitical stress and a pronounced flight-to-safety would create exceptionally strong tailwinds for gold, supporting a sharp move higher. Under this scenario gold could surge 15% – 30% in 2026 from current levels.⁹

Investment demand, particularly via gold ETFs would remain a key driver, offsetting weakness in other areas of the market, such as jewellery or technology. 

Rising prices have historically spurred investor interest, accelerating momentum. Global gold ETFs have seen US$77bn of inflows so far this year, adding more than 700t to their holdings.¹⁰ Even if we move the starting point back further to May 2024, collective gold ETF holdings are up by approximately 850t. This figure is less than half of what we have seen in previous gold bull cycles leaving ample room for growth (Chart 6).

Reflation return

On the flip side, there’s also a possibility that the policies set by the Trump administration succeed, resulting in stronger-than-expected growth linked to fiscal induced support. Under these conditions, reflation likely takes hold, pushing activity higher and lifting global growth toward a firmer trajectory. As inflation pressures mount, the Fed would be forced to hold or even hike rates in 2026.

This, in turn, would push long-term yields higher and strengthen the US dollar. The rise in yields and a firmer currency increase the opportunity cost of holding gold and draw capital back toward US assets. Improving economic sentiment would also fuel a broad risk-on rotation. 

Impact on gold: bearish

Rising yields, a stronger dollar, and the shift toward risk-on positioning weigh heavily on gold, prompting a notable withdrawal of investor interest. With hedges unwound and retail demand softening, the backdrop turns decidedly negative, resulting in a gold price correction of between 5% and 20%, from current levels.¹¹

Gold ETF holdings could see sustained outflows as investors rotate into equities and higher-yielding assets. Their magnitude would be a function of the reduction in gold’s risk-induced premium, which has been a mainstay since the invasion of Ukraine in 2022.

However, historical analysis also shows that opportunistic buying from consumers and long-term investors could act as a buffer in this kind of environment.

Despite this, the combination of higher opportunity costs, risk-on sentiment, and negative price momentum could create challenging conditions for gold, reinforcing this as the most bearish scenario in our outlook.

Wildcards 

Beyond the scenarios outlined above, central bank demand and recycling supply are notable wildcards. These factors sit outside our traditional quantitative modelling for a few reasons but could materially influence gold markets.

Central bank demand remains a significant contributor to gold’s performance. Official sector purchases have been strong and there are good reasons to expect central bank buying to continue.

Gold reserves from emerging market countries, which are the main source of demand, remain well below those from developed countries (Chart 7). If geopolitical tensions escalate, EM purchases could accelerate, reinforcing structural support for gold.

However, the decision process for central bank gold buying is often dictated by policy rather than market conditions alone. A significant pullback in purchases to or below pre-COVID levels could create additional headwinds for gold (Chart 8).

Recycling flows could also become a significant swing factor. Recycling has been relatively muted this year after accounting for factors such as the rise in the gold price and the effect of economic growth. This phenomenon has been linked to a notable increase in the use of gold as collateral for loans. 

In India, consumers have pledged more than 200t of gold jewellery through the formal sector this year alone (Chart 9). And anecdotal evidence suggests there is almost as much gold backing loans from the informal sector.

If recycling remains subdued, with gold being used as collateral instead, it will continue to provide support. But a marked economic slowdown in India could trigger forced liquidations of gold-backed collateral, boosting secondary supply and adding pressure to prices. And while there is a widespread positive perspective for India’s economy, a severe global downturn – such as the Doom loop scenario – could create a spillover effect. 

Conclusion

Gold’s outlook for 2026 is being defined by the uncertain economic environment that investors currently face. And, just like 2025, the upcoming year may bring significant volatility across financial markets.

While the current gold price broadly reflects the prevailing macroeconomic consensus and suggests a rangebound performance, our analysis indicates that the forces of softer growth, accommodative policy, and persistent geopolitical risks are more likely to support gold than to undermine it. 

Moreover, gold investment, which has been critical to this year’s performance, still has room to grow.

Despite the plausibility of a bearish scenario, it is likely that investors will maintain some exposure to gold given the unpredictability of current geoeconomic dynamics.

In addition to investment demand, central banks and recycling can provide additional support. But, under certain conditions they can also become headwinds.

Ultimately, the diversity of possible outcomes highlights the value of scenario-based planning. In a world where shocks and surprises are increasingly the norm, gold’s capacity to provide diversification and downside protection remains as relevant as ever.