Gold (XAU/USD) started the year on a bullish note and registered impressive gains in the first quarter. Following a consolidation phase during the summer months, the precious metal surged higher in the third quarter and reached an all-time record high of $4,381 in October. Although XAU/USD corrected lower, buyers refused to hand over the reins heading into the holiday season.
Throughout 2025, Gold set over 50 record peaks and rose more than 60%, becoming one of the best-performing commodities of the year. A combination of fundamental factors fuelled the precious metal’s relentless advance, allowing investors to ignore technically overbought conditions. Assessing Gold’s annual gains, “this performance has been supported by a combination of heightened geopolitical and economic uncertainty, a weaker US Dollar, and positive price momentum. Both investors and central banks have increased their allocations to Gold, seeking diversification and stability,” said the World Gold Council.
2026 is poised to be an interesting year for Gold. Changes in global economic dynamics, the ever-shifting geopolitical landscape, institutional activity and major central banks’ monetary policy decisions could all play a role in the yellow metal’s pricing through the year.
Gold in 2025: A year to remember
After posting losses for two consecutive months to wrap up 2024, Gold reversed its direction in early 2025. Escalating geopolitical tensions and heightened uncertainty about the global economic outlook, due to the new United States (US) administration’s aggressive trade policy, revived safe-haven demand. In turn, XAU/USD gained nearly 20% in the first quarter, outperforming all US major stock indices.
Leading up to the January 20 inauguration of newly elected US President Donald Trump, which had the potential to trigger a deep trade conflict with the US’s partners, markets adopted a cautious stance. With Trump signing an executive order on February 1, imposing 25% tariffs on goods from Mexico and Canada and an additional 10% on Chinese imports, the trade war officially began. After the 10% tariff on China took effect on February 4, Beijing retaliated by raising tariffs on US goods. In the meantime, the world’s second-largest economy’s Gold reserves continued to rise in February, further supporting the uptrend in prices.
Gold’s rally gained momentum in March as the trade war continued to heat up, with the Trump administration expanding and raising tariffs. At the same time, softer-than-expected inflation data from the US and the Federal Reserve’s (Fed) acknowledgement of the US economy showing signs of a slowdown, despite keeping the monetary policy rate unchanged, helped XAU/USD to stretch higher.
The introduction of the Trump administration’s reciprocal tariff framework in early April marked the beginning of the second quarter. A broad-based US Dollar (USD) weakness, in anticipation of the aggressive trade regime weighing on economic growth, combined with a risk-averse market atmosphere, allowed Gold to settle above $3,000 and register gains for the fourth consecutive month.
Gold entered a consolidation phase in May and spent the summer in a relatively tight range, as fears over a deepening trade conflict eased after the US and China agreed to lower tariffs and went into a 90-day truce period. Nevertheless, the yellow metal managed to hold its ground, as escalating geopolitical tensions in the Middle East – with Israel striking Iranian-linked targets – kept the safe-haven demand alive.
In early autumn, Gold regained its traction and kick-started the next leg of the uptrend. The worsening conditions in the US labor market, together with diminishing expectations of the US trade regime feeding into persistent inflation, led to market pricing of a dovish Fed policy outlook. As a result, the USD remained under pressure, paving the way for XAU/USD to push higher. The US Bureau of Labor Statistics (BLS) reported on September 9 that the preliminary estimate of the Current Employment Statistics (CES) national benchmark revision showed that total Nonfarm employment for March 2025 was 911,000, or 0.6%, lower than initially reported.
After rising nearly 12% in September, Gold extended its upsurge and reached a new all-time high of $4,381 in late October. The US federal government shutdown in early October due to a budget impasse added another layer of uncertainty to the US economic outlook and labor market dynamics, providing an additional boost to Gold in the last quarter of the year.
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Gold in 2026: A deep correction seems unlikely
The state of the global economy, potential monetary policy divergences between major economies’ central banks and the geopolitical landscape will likely continue to drive Gold’s performance in 2026.
Base case/neutral scenario
The most likely scenario for the Gold price in 2026 is a generally sideways action, accompanied by moderate gains.
The Fed is widely expected to remain dovish next year to support the labor market and the economy in general. However, it is likely to avoid aggressive rate cuts unless there is a significant drop in inflation to pre-pandemic levels. Nevertheless, in case other major central banks, such as the European Central Bank (ECB), the Bank of Japan (BoJ) and the Bank of England (BoE), adopt a neutral/hawkish stance as anticipated, the USD is likely to remain weak alongside falling US Treasury bond yields. Although this is likely to support XAU/USD, the upside could remain capped, with the Euro (EUR) and/or Pound Sterling (GBP) capturing capital outflows out of Gold.
Another supportive factor for the Gold price in the base case could be the continuous institutional interest. Even though it is difficult to forecast what kind of reserve allocation central banks plan for 2026, the current trend suggests that China and emerging economies are likely to remain as net buyers of Gold.
Geopolitical tensions are likely to persist without a material escalation, helping Gold hold its ground but keeping safe-haven demand in check at the same time. The trade relation between the US and China could remain stable, even if US President Trump throws his occasional jabs. While an everlasting peace in the Middle East is unlikely, there are yet no signs of a deepening conflict. Finally, investors could ignore developments in the Russia-Ukraine war, as long as there is no peace agreement or heightened military action from either side.
“While the current Gold price broadly reflects the prevailing macroeconomic consensus and suggests a rangebound performance, our analysis indicates that the forces of softer growth, accommodative policy, and persistent geopolitical risks are more likely to support Gold than to undermine it,” said the World Gold Council in regard to the yellow metal’s potential performance in 2026.
Bullish scenario
The bullish scenario for Gold includes aggressive policy easing by the Fed, elevated uncertainty surrounding the global economy and escalating geopolitical tensions.
A worsening labor market in the US, a sharper slowdown in the economy and a relatively stable inflation could force the US central bank to opt for large rate cuts next year. A steep decline in bond yields could weigh heavily on the USD and open the door for a decisive leg higher in XAU/USD. A struggling US economy could also negatively affect the global economy, amplifying Gold’s status as a traditional safe-haven.
Moreover, Gold could stretch its uptrend if US-China relations sour, there is a reescalation of the conflict in the Middle East and an increased aggression in the Russia-Ukraine war.
Daan Struyven, the cohead of global commodities research at Goldman Sachs, told Bloomberg that he believes Gold could hit $4,900 by the end of 2026, citing increased central bank buying and policy easing by the Fed as primary drivers. Similarly, the Bank of America raised its price forecast for Gold to $5,000 in 2026, with an average of $4,400. “The White House’s unorthodox policy framework should remain supportive for gold given fiscal deficits, rising debt, intentions to reduce the current account deficit/capital inflows, along with a push to cut rates with inflation around 3%,” the bank explained, as reported by Reuters.
Bearish scenario
In this final, and the least likely scenario, Gold could suffer large losses next year.
If the US economy performs much better than expected and the labor market recovers much quicker than what current conditions suggest, the Fed could enter a wait-and-see mode, allowing the USD to rebound and causing XAU/USD to turn south. In case inflation in the US starts rising again while the economy proves to be strong, a return to policy easing by the US central bank could be delayed even further.
A significantly better geopolitical landscape could also cause investors to move away from Gold. A lasting abatement in the Middle East and a peace deal between Russia and Ukraine, if combined with an improving global economy, could make risk-sensitive assets more attractive and make it difficult for the precious metal to occupy a large space in investors’ portfolios.
Gold 2026 Technical Analysis: Bullish bias remains, overbought conditions suggest caution
The weekly chart for XAU/USD suggests that the bullish bias remains intact, but overbought conditions hint that there could be a downward correction before the uptrend continues.
Gold price holds above the upper limit of a 14-month-old ascending regression channel and the Relative Strength Index (RSI) indicator sits above 70.
On the downside, the first important support level could be seen at $3,900, where the mid-point of the ascending channel and the 20-week Simple Moving Average (SMA) align. If Gold drops below this region and confirms it as resistance, $3,575 (lower limit of the ascending channel) could be seen as the next support level before the $3,460-$3,435 region (static level, 50-week SMA). If Gold settles below the ascending channel, technical sellers could show interest and open the door to an extended decline toward the next static support at $3,200 before $3,000 (psychological level).
Looking north, the record-high set at $4,381 could be seen as an interim resistance level. If Gold manages to clear that level, while avoiding overbought conditions, the bullish momentum could gather pace and pave the way for an advance toward the psychological barrier at $5,000.
Final Thoughts
2025 was one of Gold’s strongest annual performances since the late 1970s, as the precious metal regained its status as the go-to safe-haven asset. While there is potential for Gold to set new record-highs in 2026, a performance similar to 2025 could be hard to come by. The geopolitical landscape and the impact of the Fed’s policy steps on the USD’s valuation are likely to remain as the primary drivers of XAU/USD’s action.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.