As we enter 2026, we maintain a constructive stance on gold, reflecting a widening investor base and its continued role in portfolio diversification.
Following an exceptional year in 2025, when gold rose by around 70% and delivered one of its strongest performance since the 1970s, we expect returns to normalise in 2026. While a repeat of last year’s gains is unlikely, the outlook for gold remains supportive, underpinned by the following factors:
Robust central bank demand
Central banks continued increasing their gold holdings in 2025, with most estimates showing a rise of around 850 tonnes over the year. This quantity was slightly below the annual average of purchases since 2022. Consensus estimates show that central banks should continue to purchase gold at a pace of around 800 tonnes over 2026, which is equivalent to around 26% of annual mine output. Central bank purchases reflect a long-term portfolio-diversification trend among reserve managers, and we anticipate that this trend still has several years to run, implying that gold will benefit from a solid underlying demand profile.
Increasing retail demand
In 2025, retail-focussed investors materially increased their allocations to gold. In Q4 alone, retail- focussed ETFs experienced inflows equivalent to over 280 tonnes in purchases, eclipsing central bank demand. We anticipate that retail investors should be a strong driver of higher prices in 2026, as they increase allocations to the precious metals complex. The combination of both central bank and retail investor demand implies that the global demand curve may shift substantially higher, thereby supporting ongoing price increases.
Portfolio diversification
In 2025, gold gave investors significant portfolio diversification benefits, as the yellow metal showed relatively low correlations with the other major asset classes. This was particularly evident during the market declines in April, following US President Trump’s tariff announcements. We believe that portfolio diversification concerns should be a strong driver of demand, given elevated valuation profiles in many other markets.
Monetary convergence
The US Federal Reserve reduced its federal funds rate in 2025, and consensus estimates derived from
the overnight index swap (OIS) curve show that investors anticipate around 75 bps in further rate cuts in 2026. These rate cuts should reduce the US’s real interest rate profile. Such a development is normally constructive for gold, which shows a negative correlation with real interest rate developments. We note that several other large central banks continued to reduce their interest rate profiles in 2025, and the upshot of this is that the wider monetary backdrop remains favourable for gold as we enter 2026.
Elevated debt levels
Most advanced economies have extremely high levels of debt and are making little genuine effort to reduce aggregate sovereign debt profiles. Ongoing deficit spending shows little sign of abating, meaning that both fiscal deficits and debt levels are set to continue rising. This is constructive for gold, and even small reallocations from sovereign bond markets into gold can have a substantial impact on pricing.
Geopolitical tensions
Tensions between the US and China are here to stay, and we note that the wider geopolitical backdrop is especially fraught compared with previous decades. The underlying trend towards a more multi-polar world is constructive for gold, given the potential for trade conflicts, supply-chain disruption, and higher inflation outcomes over time. We believe that this is a long-term trend and it is likely to persist in 2026 and over the coming years.
In summary, we maintain a constructive stance on gold, and we anticipate that it will rise to levels of around USD 5,200 per oz by Q4 2026.
The financial instruments and investment strategies portrayed in this document are for informative purposes only. They may differ from those effectively held in an investor’ portfolio. Depending on the jurisdiction and investment profile, one or some of these instruments and strategies – including, where applicable, options – may not be permitted, available or suitable. The opinions expressed herein are correct as at 19 January 2026 and are subject to change without notice. Any forecast, projection or target, where provided, is indicative only and is not guaranteed in any way.
