GOLD’S first half of 2026 has been a study in contrasts. The metal set 12 record highs during the first six weeks of the year, peaking at $5,500/oz intraday in late January, before retreating sharply to briefly dip below $4,000/oz in late June.
In its Mid-Year Outlook 2026, released this week, the World Gold Council (WGC) predicts a range-bound path of around $4,100/oz for the second half of the year. That is no surprise. What is surprising — and something the WGC does not satisfactorily explain — is that the decline has come amid the escalating US-Iran conflict, which failed to lift gold as classical safe-haven logic would suggest.
The WGC attributes this to idiosyncratic factors specific to the current period rather than any breakdown in gold’s risk-hedging role, noting that gold was not alone among assets defying expectations during the crisis: equity markets, too, shrugged off its effects. It maintains that gold’s traditional hedging role remains structurally intact, pointing to a widening base of buy-and-hold participants — sovereign wealth funds and pension funds — layered atop two decades of structural tailwinds from the growth of gold ETFs, central bank buying and emerging-market demand.
Whether the council’s confidence is justified remains to be seen. What is uncontested is that the geopolitical turmoil has also been mirrored in unprecedented levels of bullion volatility. According to the WGC, realised volatility spiked above 50% around the onset of the US-Iran conflict before subsiding to below 30%, still above its 20-year average of 17%. Such spikes, the WGC notes, suggest that the current elevated volatility should ease further in the second half.
The WGC hedges its bets on the outlook, though the consensus suggests gold will stay relatively range-bound for the remainder of 2026, in line with a global backdrop of moderate growth, cooling but still-elevated inflation, and expectations of further — but limited — central bank tightening.
But the stage is also set for a possible breakout. On the upside, clear catalysts — a worsening economy, a renewed geopolitical shock, or a shift towards lower interest-rate expectations — could reignite gold’s momentum and lift it back towards $4,500/oz or above. If the signals are strong, gold could push even higher.
Conversely, an environment of resilient growth, rising yields and calmer markets could see gold slip further — though a fall of more than 10% from current levels may be tempered by bargain-hunting demand, the WGC says.
