Gold has surged more than 70 per cent this year fuelled by aggressive central bank buying, a global interest rate cutting cycle and safe-haven demand. The key question now is whether it can hold on to those gains in 2026.
The precious metal was trading at $4,499 at 8.40am on Wednesday after crossing a record $4,500 earlier in the session. It is on track to post a hat-trick of positive annual returns.
“While the long-term bullish case remains intact and selling gold is still difficult to justify, the macro backdrop looks more finely balanced. Central bank demand may not be as relentless at elevated prices, much of the global easing cycle may already be priced in, bond yields remain high, and easing geopolitical tensions could gradually reduce gold’s safe-haven appeal,” says Fawad Razaqzada, market analyst at City Index and Forex.com.
“As a result, 2026 may not be super bullish for gold, and the metal could be heading for a long-overdue consolidation rather than a repeat of 2025’s explosive rally.”
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, agrees, saying because prices surged too fast in a too short period of time, a technical correction is probably the biggest downside risk for gold next year.
Ole Hansen, head of commodity strategy at Saxo Bank, says other developments that may weigh on gold are a renewed rise in real yields if growth stabilises, broad risk-on markets reducing hedging demand, a stronger dollar and a potential de-escalation, especially between the US and China, removing some risk premium.
Gold is on track for its best annual performance since 1979. The rally has been driven by a broader pullback by investors from government debt and key currencies. Geopolitical tension has also enhanced its haven appeal.
Investors are watching closely for any sign of further monetary easing after the US central bank delivered its third consecutive rate cut – a tailwind for precious metals.
The metal surged higher at the start of the year, pausing for breather during the summer months, before extending the rally in the second half. Some bullish momentum was lost in mid-October after the metal hit a record peak of $4,381. The metal then bounced back heading into the final weeks of 2025, hitting a record high.
“After such a powerful rally in 2025, we are not expecting gold to make any groundbreaking gains in 2026,” Mr Razaqzada says.
“Granted the metal may go on to achieve that $5,000 hurdle, which would point to a further 15 per cent to 20 per cent upside, but the macro backdrop may not be as welcoming for gold as has been the case in 2025 and earlier.”
What could push prices to new highs?
Softer central bank policies, lower yields and a further loss of appetite in the US dollar and US Treasuries could lead gold to hit new highs, according to Ms Ozkardeskaya.
Sticky inflation combined with rate cuts into slowing growth would raise concerns about stagflation-like conditions, a historically supportive environment for gold, Mr Hansen says.
“Continued focus on fiscal dominance and debt sustainability – especially in the US as interest rate payments become one of the largest government expenditures – would further underpin demand,” he says.
“Political interference in central bank independence, particularly in the Federal Reserve’s rate-setting mandate, would also be supportive.”
Central bank demand
Central banks have been buying gold primarily to reduce exposure to dollar-based assets, and in some cases as a replacement for the dollar, experts say.
The fact that emerging markets’ central banks are replacing UST holdings by gold does not only support gold prices but also makes sure that “we will not see a long-term meltdown”, Ms Ozkardeskaya says.
Mr Razaqzada believes China’s role remains pivotal in shaping gold’s 2026 outlook. Buying has remained concentrated among a small number of central banks, led by the People’s Bank of China and the National Bank of Poland.
However, the pace of central bank buying in 2025 was slower compared to the previous few years, no doubt due to the “significantly higher” prices, he says.
“While purchases ramped up from the National Bank of Poland (83 tonnes), Kazakhstan (41 tonnes) and most other emerging-market central banks, PBOC has slowed down its purchases,” he states.
“If the PBOC further tempers its buying at these elevated price levels, leveraged positions could unwind quickly on realisation of cooling Chinese demand. Indeed, we have already seen several central banks reducing their gold reserves in 2025, including those in Singapore and Uzbekistan. At some point, the opportunity to make a handsome profit will be too tempting to ignore.”
How much upside is left?
From a geopolitical front, there were glimmers of risks easing: slow-moving peace conversations in Ukraine, a ceasefire in Gaza and more stable trade relations between Washington and Beijing. In theory, each of these should trim gold’s safe-haven demand, yet the metal has barely reacted, Mr Razaqzada says.
The softer dollar throughout 2025 helped maintain a floor, but it remains to be seen how much further the dollar selling will continue, especially if there is a supply side shock that boosts inflation again, he says.
“Gold may well remain elevated, but sustaining further gains from here will require either a fresh geopolitical jolt or a clear dovish shift in global rate expectations – neither of which is guaranteed,” Mr Razaqzada adds.
Silver outlook
The uncertainty around gold’s upside stands in contrast to silver, which has gained this year underpinned by tightening supply and robust industrial demand.
Silver touched a record high of $69.98 on Tuesday. It has risen 142 per cent year-to-date on supply deficits, industrial demand and investment inflows.
“Silver had a stellar year. The technicals are pointing at overbought market conditions for the short run – suggesting that a downside correction would be healthy,” Ms Ozkardeskaya says.
“But the medium-term outlook remains constructive: a softer US dollar, the developing debasement trade along with short supply and rising demand, should continue to support gains next year.”
Meanwhile, Mr Hansen said miners have struggled for years to keep pace with rising industrial demand linked to electrification, solar power, electric vehicles and data-centre expansion.
That imbalance was brought sharply into focus when silver was added to the US critical minerals list. Ahead of a potential tariff announcement next year, large volumes of silver were shipped into US warehouses, creating a dislocation between the US and the rest of the world and tightening availability elsewhere, he says.
Silver is required to build faster batteries, electric vehicles and solar infrastructure, says Vijay Valecha, chief investment officer at Century Financial. Since gold and silver are highly correlated, silver moved higher as well. However, the short squeeze in October flipped the script for silver, leading it to outpace gold in terms of returns, he explains.
"2026 is likely to feature wide trading ranges rather than a straight-line rally. Pullbacks would be healthy. Still, if deficit persists and investment flows remain supportive, silver could move toward the $90–$100 per ounce range, though volatility is likely to remain elevated," Mr Valecha says.
It was not just precious metals that rallied. Tariff-driven trade distortions stemming from US' critical-minerals policy also lifted industrial metals, with copper hitting a record above $12,000 per tonne and rising 36 per cent so far this year.
