Investors should brace for what could be a make-or-break year for gold: according to the latest 2026 outlook by the World Gold Council (WGC).
After a blistering 2025 that saw gold hit more than 50 all-time highs and rise over 60 percent, the WGC says 2026 could deliver anything from a modest rally to a steep pullback.
The year was also a contest between bullish forces tied to slowing global growth and persistent political instability, and bearish pressures that could emerge if the Trump administration successfully lifts US economic performance and interest rates rise again.
For now, the Council says the gold price “broadly reflects macroeconomic consensus expectations,” suggesting the market could remain rangebound unless major shocks alter that trajectory.
But 2025 was a reminder that consensus can be fragile. The Council notes that heightened geopolitical risk alone explains a significant portion of this year’s rally, noting that those same dynamics could again dominate if global conditions deteriorate.
A year that redefined gold’s appeal
Gold’s 2025 surge is shaping up to be its fourth-strongest yearly return since 1971—the end of the Gold Standard era. Investment demand has accelerated across major regions and central banks have also continued to add to reserves at levels far above historical averages.
The long-term performance has caught even more attention. New market data shows gold has climbed 953.78 percent over the last three decades, surpassing the S&P 500’s (INDEXSP:.INX) 918.15 percent gain over the same period.
The symbolic victory is fueling renewed interest from investors who once dismissed bullion as a slow, unproductive asset.
The case for strategic exposure has been reinforced by the metal’s resilience during market stress. Gold saw powerful rallies after the dot-com crash and again during the 2008 financial crisis. It smashed records in 2011, and now in 2025 it is trading near US$4,238 per ounce heading into year-end.
Three diverging paths for 2026
The WGC’s outlook sets out three primary macroeconomic paths that could drive gold next year: a moderate slowdown, a deep global downturn, or a reflationary growth outcome tied to US policy success.
Scenario 1: A shallow slip, moderately bullish for gold
If economic momentum cools—particularly in the U.S. labor market—without collapsing outright, investors may rotate further into defensive assets. A pullback in AI-linked equities could intensify market volatility, while softer consumer activity would put more pressure on policymakers to continue loosening monetary settings.
In this environment, the Council says gold could gain 5 to 15 percent. Lower rates and a softer dollar would help, as would ongoing central bank buying and potential new flows from large institutional investors in Asia.
Scenario 2: The “doom loop,” strongly bullish for gold
A darker outcome is also on the table: a synchronized global downturn triggered by escalating geopolitical flashpoints or trade fragmentation.
As confidence falls and economies contract, the Federal Reserve could be forced into deep rate cuts while capital floods into safe havens.
The Council estimates gold could advance 15 to 30 percent under such conditions, powered largely by strong investment demand through gold-backed exchange-traded funds.
The Council notes that ETF holdings have risen by more than 700 tonnes this year, and even including inflows going back to mid-2024, the total remains less than half of what was seen in earlier bull cycles.
Scenario 3: Reflation return, bearish for gold
There is also a non-negligible possibility that President Trump’s fiscal and industrial policies spark stronger-than-expected growth.
In that case, inflation pressures could push the Fed to keep rates elevated, or even raise them again, sending the dollar higher and dampening gold investment appeal.
In this upside-growth scenario, the Council projects a 5 to 20 percent drop in gold prices as investors unwind hedges and rotate into stocks and higher-yielding assets.
US policy looms large over 2026
One major swing factor centers around Trump’s expected nomination of a Federal Reserve chair who favors lower borrowing costs.
At the same time, geopolitical risks tied to US actions have been growing. The administration’s more aggressive posture toward Venezuela and heightened tensions involving China and Russia are adding risk premiums across commodities and supply chains.
These dynamics continue to push global investors toward gold when uncertainty peaks.
The Federal Reserve’s near-term decisions will remain crucial. Markets are currently pricing a high probability of additional rate cuts, even as inflation remains a concern. Each shift in those expectations is likely to reverberate through gold pricing.
Market wildcards
The WGC also took note of two supply-demand forces that sit somewhat outside typical quantitative models but could shape outcomes significantly: official sector buying and recycling flows.
Central banks remain one of the largest demand pillars. Purchases have consistently exceeded pre-pandemic levels in part because emerging-market governments are diversifying away from dollar-exposed reserves.
Gold recycling is another overlooked lever. Despite soaring prices, secondary supply has been muted in 2025, partly because gold is increasingly being used as collateral.
More than 200 tonnes of gold jewelry have been pledged through formal channels this year alone, with anecdotal evidence suggesting similar volumes are tied up informally.
If a severe downturn forces liquidations of gold-backed debt, recycling flows could climb sharply, adding pressure to prices.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.