After a 7% Correction, Gold Faces a Defining Second Half of 2026

After six months marked by one of the most volatile periods in the history of the gold market, investors are turning their attention to the second half of 2026, seeking an answer to the key question: Has the correction that erased nearly 7% of gold's value since the beginning of the year come to an end, or are markets preparing for another significant move higher or lower?

In its Mid-Year Outlook, the World Gold Council (WGC) believes gold is entering the second half of the year from a delicate equilibrium, following a comprehensive market repricing over recent months. According to the report, the metal's trajectory will be driven by a combination of economic, monetary, and geopolitical factors, most notably U.S. Federal Reserve policy, the U.S. dollar, inflation, central bank purchases, and the growing influence of Asian markets on global price formation.

Base Case: Limited Price Movements Await New Catalysts

The WGC believes current gold prices broadly reflect prevailing expectations for the global economy, including moderate economic growth, gradually easing inflation, and relatively elevated interest rates throughout the remainder of the year.

Against this backdrop, the report expects gold to trade within a range of approximately 5% above or below current levels during the second half of 2026, provided that no major economic or political developments materially alter market expectations.

The report emphasizes that this is not a fixed price forecast but rather the market's baseline scenario under current conditions. Should new catalysts emerge, prices could break out of this range in either direction.

Federal Reserve Remains the Dominant Driver

The report identifies U.S. monetary policy as the single most influential factor for gold in the coming months.

Markets continue to anticipate another Federal Reserve interest rate increase before year-end, despite ongoing divisions among policymakers regarding the appropriate policy path.

According to the WGC, any shift toward expectations of future rate cuts would become one of the strongest bullish catalysts for gold. Conversely, prolonged monetary tightening and higher bond yields could continue to weigh on the precious metal.

Dollar and Bond Yields Continue to Matter

Despite significant structural changes in the gold market, the World Gold Council stresses that the U.S. dollar and Treasury yields remain among the primary determinants of gold prices.

A stronger dollar and higher yields increase the opportunity cost of holding non-yielding assets such as gold, reducing its investment appeal. Conversely, a weaker dollar or declining yields typically support stronger demand for bullion and higher prices.

However, the report notes that gold is no longer driven exclusively by these traditional variables, as global markets have become increasingly complex and influenced by a broader set of factors.

Geopolitical Risks Could Quickly Restore Momentum

The report also highlights geopolitical risks as one of the most important potential sources of support for gold.

Historical analysis shows that every 100-point increase in the Geopolitical Risk Index has, on average, been associated with a 2.5% rise in gold prices.

Although gold did not respond as strongly as expected to recent Middle East tensions, the WGC considers this an exception driven by unique circumstances rather than evidence of a structural change in gold's traditional role as a safe-haven asset during periods of geopolitical uncertainty.

Asia Is Reshaping the Global Gold Market

One of the report's most significant conclusions is the ongoing shift in the center of gravity within the global gold market toward Asia.

China and India, in particular, are playing an increasingly important role in determining price direction.

According to the report, most of gold's recoveries during the first half of the year occurred during Asian trading sessions, while the majority of selling pressure originated during U.S. trading hours. This reflects the growing influence of Asian investors and consumers on the global gold market.

Central Banks Continue to Provide Structural Support

The report identifies central banks as one of the strongest structural pillars supporting gold prices.

Since 2022, central banks have purchased an average of approximately 1,000 tonnes of gold annually.

Although buying slowed during certain periods this year, the World Gold Council expects central banks to remain net buyers, supported by continued efforts to diversify foreign exchange reserves and reduce dependence on the U.S. dollar.

The report adds that purchases exceeding historical averages would not only increase physical demand but also reinforce investor confidence in gold as a long-term strategic reserve asset.

India Remains a Key Market

The report also focuses on India, the world's second-largest gold market.

Recent government decisions to raise import duties on gold are expected to reduce domestic demand by approximately 50–60 tonnes this year.

While the market has largely absorbed the impact of these measures, the WGC notes that any additional economic slowdown in India could weigh on global gold demand in the months ahead.

What Could Drive Gold Higher?

According to the report, three major catalysts could reignite gold's momentum during the second half of 2026:

A slowdown in global economic growth or an escalation in geopolitical tensions.

A shift by central banks toward less restrictive monetary policy.

Renewed investor buying following this year's price correction.

Should these conditions materialize, the World Gold Council believes gold could return to around $4,500 per ounce, with stronger bullish catalysts potentially pushing prices even higher.

What Could Pressure Prices?

On the downside, the report warns that continued strength in the U.S. economy, a stronger dollar, rising Treasury yields, and increased investor appetite for equities and other risk assets could extend pressure on gold prices.

Nevertheless, the WGC expects buying on price declines to limit any sharp sell-off, supported by ongoing investment demand and continued purchases from central banks and long-term investors.

Gold Between Stability and Opportunity

The World Gold Council concludes that the second half of 2026 will differ significantly from the first, as the market transitions from an aggressive repricing phase toward the search for a new equilibrium.

Its base-case scenario points to continued price fluctuations within a relatively narrow range if current economic conditions persist.

However, the door remains open for a renewed rally should interest rate expectations soften, geopolitical risks intensify, or investors return aggressively to the gold market.

At the same time, while the continued strength of the U.S. economy and the dollar may keep downward pressure on prices, sustained central bank demand, the expanding base of long-term investors, and the growing influence of Asian markets are expected to preserve gold's status as one of the world's most important strategic assets and safe-haven investments.