WGC: Gold to Hold Near US$4,100 in Second Half of 2026

H1 volatility and session divergence

Gold's 7 percent year-to-date decline masks a volatile H1 that saw the metal hit 12 all-time highs.

Driven by elevated options activity and safe-haven positioning at the onset of the US-Iran conflict, spot gold bypassed US$5,500 intraday in late January before retrenching toward US$4,000 in late June.

An econometric breakdown via the WGC's Gold Return Attribution Model reveals that short-term momentum, investor trend following and late-stage profit taking were the primary engines of price variability. Macroeconomic risk and geopolitical uncertainty contributed 16 percent to price variability, while foreign exchange volatility accounted for 15 percent as markets repeatedly adjusted to alternating patches of dollar strength and weakness.

Economic expansion and underlying interest rate expectations accounted for 11 percent and 3 percent of the metal's price variability, respectively, according to the WGC. Intraday transaction data further shows a distinct geographical split in price discovery between western and Asian market participants.

The bulk of gold’s positive price performance occurred during Asian trading hours, which yielded a 12.97 percent return and served as the market's primary engine of price support.

Conversely, the liquidation and price pullbacks were heavily concentrated during US trading hours, which logged a 15.08 percent decline, while European sessions remained relatively flat with a negative 1.32 percent return.

According to the WGC's report, this divergence only solidifies the expanding role that Asian consumers and institutional investors occupy in setting the global price trajectory.

Institutions revise gold price forecasts

Various major financial institutions have also recently revised their gold price forecasts, lowering their near-term targets due to changing interest rate expectations.

Earlier this month, Goldman Sachs (NYSE:GS) reduced its 2026 year-end gold price target from US$5,400 to US$4,900, citing lower anticipated inflows into gold exchange-traded funds.

Deutsche Bank (NYSE:DB) also lowered its Q4 projection to US$4,800 from a previous estimate of US$6,000.

Overall, market analysts note that long-term fundamental drivers remain distinct from monetary policy shifts.

“Bottom line, in my view, what causes gold to turn around is when the Fed has to stop pretending that it cares about inflation, that it can do a darn thing about it, and just starts going nuts,” Chris Temple, editor of the National Investor, told the Investing News Network. “That's when gold gets going again, and we're a little ways from that.”

Central bank, Indian demand to drive gold dynamics

The report further identifies central bank demand and regulatory changes in India as key variables for H2.

Central banks have purchased an average of 1,000 metric tons of gold per year since 2022.

Econometric modeling indicates that a 20 to 25 metric ton change in official purchases above the long-term baseline of 600 metric tons per year correlates to a 1 percent move in the gold price.

In India, the world’s second largest consumer market, the government raised import duties from 6 percent to 15 percent in April to manage its current account deficit and protect foreign exchange reserves.

The WGC estimates the tariff increase will reduce Indian jewelry, bar and coin demand by 50 to 60 metric tons, a 10 percent year-on-year decline in domestic consumption.