10 Pc Dip in Gold Prices to Bring Organic Demand and Support Prices: WGC
Gold set more than 12 all-time highs and reached a record US$5,405/oz in late January before pulling back sharply below $4000 in June – a swing that resulted in a 7% year-to-date drop in price and an increase in average volatility to 30%.
If geo-economic conditions deteriorate or US Federal Reserve’s rate expectations shift, gold prices are likely to move above $4,500/oz. On the downside, dollar strength, rate hikes above expectations, and risk-on sentiment and sustained trading below $4,000/oz could trigger further selling, though a drop of more than 10 per cent from current levels will bring back organic demand from long-term buyers, finds World Gold Council.
Gold set more than 12 all-time highs and reached a record US$5,405/oz in late January before pulling back sharply below $4000 in June – a swing that resulted in a 7% year-to-date drop in price and an increase in average volatility to 30%.
Despite the pullback, gold remains one of the strongest-performing assets over the past year. Elevated geopolitical risk, driven in large part by the US-Iran conflict, was the most significant contributor to first-half performance, alongside momentum from investor positioning and profit-taking.
As investors look to the second half, gold will continue to serve as a barometer of global macroeconomic conditions. At current levels, the price is broadly consistent with consensus: at least one Fed rate hike in 2026, likely by October; parallel tightening from the Bank of England, Bank of Japan, and European Central Bank; and US inflation peaking near 3.9% in Q2. If these conditions hold, gold may trade within plus or minus 5% of approximately $4,100/oz through year-end.
Gold could resume its upward trend if geopolitical or economic conditions deteriorate, or if rate expectations shift. It can push gold above $4,500/oz. On the downside, dollar strength, rate hikes above expectations, and risk-on sentiment are the primary headwinds. sustained trading below $4,000/oz could trigger further selling, though a drop of more than 10% from current levels will likely bring organic demand from long-term buyers across multiple geographies, based on historical performance.
“Rates matter, and we expect them to be a key variable in the second half. But gold’s performance is not driven by a single factor. Gold has come under pressure near US$4,000/oz this year and previously rebounded, supported by organic demand from long-term buyers across multiple geographies. That structural demand from central banks, institutional investors, and consumers worldwide is what underpins gold’s resilience,” Juan Carlos Artigas, Regional CEO, Americas and Global Head of Research, WGC.