Gold’s record 2025 performance sets the stage for a volatile and scenario-driven outlook in 2026.Gold delivered a standout 2025, setting more than 50 all-time highs and rising over 60 per cent based on the LBMA Gold Price PM as of 28 November 2025.
The World Gold Council attributed this surge to geopolitical and economic uncertainty, a weaker US dollar and sustained positive price momentum.
The report said gold’s outlook for 2026 is shaped by “ongoing geoeconomic uncertainty”, suggesting the price may stay rangebound unless conditions meaningfully shift.
Gold’s 2025 rally, gearing up to be its fourth-strongest annual return since 1971, was supported by a supercharged geopolitical environment and a softer dollar. Return attribution analysis showed geopolitical risk and dollar weakness accounted for roughly 16 percentage points of the annual gain.
The World Gold Council said reduced opportunity cost contributed another 10 points, while momentum added nine points and economic growth added 10. It noted these drivers were unusually balanced, reflecting a market influenced by diverse forces rather than a single catalyst.
Under a “shallow slip” scenario, weakening US labour-market conditions and lower rates could result in a 5 to 15 per cent rise in gold. The report said lower interest rates, a weaker dollar and ongoing central bank buying would support this outcome.
A deeper downturn, labelled the “doom loop”, could see geopolitical tensions intensify and confidence collapse across global markets.
The World Gold Council said aggressive Fed rate cuts, falling yields and a softer dollar would create “exceptionally strong tailwinds” for gold under this scenario, projecting that gold could climb 15 to 30 per cent in 2026 if this environment materialises.
In a reflationary environment driven by stronger growth linked to Trump administration policies, the Fed may be forced to hold or lift rates.
The report said rising yields and a firmer dollar could lower demand for gold, producing a correction of 5 to 20 per cent.
Central bank demand was identified as a key wildcard due to emerging-market reserves still lagging advanced economies.
The World Gold Council said any significant pullback in official-sector purchases could create additional price headwinds.
Recycling trends were also highlighted, with more than 200 tonnes of gold jewellery pledged as collateral in India in 2025.
The report warned that a sharp economic downturn could force liquidations of this collateral, boosting supply and pressuring prices.
It concluded that despite bearish possibilities, gold’s diversification properties are likely to sustain investor interest amid persistent uncertainty.
