The precious metal recorded more than 12 all-time highs in the first half of the year, touching a record $5,405 an ounce in late January before retreating sharply to a low of $4,002 an ounce in June. The pullback has left gold down 7% year-to-date, while average volatility has climbed to 30%. Even so, it remains one of the best-performing asset classes over the past year.
Geopolitics remains the key driver
According to the WGC’s Gold Return Attribution Model (GRAM), heightened geopolitical tensions — led by the US-Iran conflict — were the biggest driver of gold’s performance in the first half, alongside momentum from investor positioning and profit-taking.
Opportunity cost had a mixed impact as markets repriced expectations for interest rates and the US dollar. The council also noted that most of gold’s price movements occurred during Asian and US trading hours, highlighting the growing influence of Asian investors in global price discovery.
Looking ahead, the WGC said its Gold Valuation Framework suggests the metal will continue to serve as a barometer of global macroeconomic conditions. Unlike many other assets, gold reflects demand from consumers, investors and central banks across multiple regions.
At current levels, gold prices are broadly consistent with a consensus scenario that assumes at least one US Federal Reserve rate hike in 2026, likely by October, alongside policy tightening by the Bank of England, Bank of Japan and European Central Bank. The outlook also assumes US inflation peaks at around 3.9% in the second quarter. If these conditions hold, gold is expected to trade within ±5% of around $4,100 an ounce through the end of the year.
The council said gold could resume its upward trajectory if geopolitical or economic conditions deteriorate, or if interest-rate expectations shift materially. However, only a pronounced global slowdown is likely to push prices above $4,500 an ounce. On the downside, a stronger US dollar, more aggressive rate hikes and improving risk appetite remain the key headwinds.
The WGC added that sustained trading below $4,000 an ounce could trigger further selling. However, based on historical trends, a correction of more than 10% from current levels would likely attract long-term buying interest from central banks, institutional investors and consumers across multiple markets.
Juan Carlos Artigas, Regional CEO, Americas, and Global Head of Research at the World Gold Council, said gold has once again demonstrated that it is a truly global asset whose price reflects macroeconomic and geopolitical developments around the world, rather than just conditions in the US. While interest rates will remain a key variable in the second half, he said, gold’s resilience continues to be underpinned by structural demand from central banks, institutional investors and consumers worldwide.
