Gold Market Expected to Continue Rally, But Investors Should Temper Expectations

It is expected that the gold market will continue its record rally; however, investors should moderate their expectations, as analysts at the World Bank anticipate prices will rise by only 5% in 2026, which contrasts sharply with the 50% price surge this year.

In its updated commodity forecast, the World Bank projects that gold prices will average about $3,575 per ounce in 2026. The international development organization also expects silver prices to average $41 per ounce next year, an increase of 7.9% from the current average price.

However, the rally in gold and silver prices might stall by 2027. The World Bank forecasts gold prices to average about $3,375 per ounce that year, a decline of more than 5% from 2026. Silver prices are expected to average about $37 per ounce, a drop of nearly 10%.

Drivers of the Recent Surge

Analysts stated: "The rally in recent months has been largely driven by investment demand, supported by a combination of geopolitical tensions, macroeconomic concerns, and rising policy uncertainty, underpinned by a weaker US dollar and recent US monetary policy easing."

They added: "Gold prices are projected to rise by 42% in 2025 (year-on-year). The last significant increase occurred in 1979-1980, when gold prices nearly doubled amid surging US inflation, oil price shocks, a weak dollar, and geopolitical turmoil. The current gold rally has again coincided with escalating geopolitical tensions and a weak dollar, but unlike 1979-1980, inflationary pressures and energy market disruptions have been less severe. Instead, the main distinguishing feature has been the unprecedented pace of central bank purchases."

While gold may face some selling pressure in 2027, the World Bank still expects the market to establish a high baseline level.

Analysts said: "Despite the expected moderation, prices are projected to remain more than 180% higher than their 2015-2019 average in 2026."

 Silver Outlook and Upside Risks

The World Bank is more optimistic about silver next year, as both investment and industrial demand continue to drive prices.

The World Bank added: "Demand for silver is expected to continue growing steadily, reflecting its dual role as a safe haven and a critical input in fast-growing sectors such as renewable energy and semiconductor production."

While the World Bank maintains its cautious forecast, analysts noted there are upside risks to their projections.

They added: "Although geopolitical tensions and policy uncertainty have somewhat eased in recent months, any renewed escalation – through trade frictions, increased tariffs, or worsening conflicts – could trigger additional safe-haven flows, pushing gold and silver prices to levels higher than current expectations. Unforeseen financial volatility could also drive precious metal prices higher."

On the other hand, analysts warned that an easing of geopolitical tensions and tighter monetary policies could negatively affect safe-haven and investment demand for gold and silver.