Gold investment still has room to grow in 2026 as geopolitical risks persist: World Gold Council

09/12/2025 01:51 AST

Gold, which witnessed a strong rally throughout 2025, is expected to continue its positive momentum in 2026 as investment demand for the precious metal still has room to grow amid persistent geopolitical uncertainties, highlighted a report by the World Gold Council.

According to the report, the outlook for gold in 2026 is being shaped by the uncertain economic environment that investors are currently navigating. Similar to 2025, the upcoming year may also bring significant volatility across global financial markets.

It stated, "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. Moreover, gold investment, which has been critical to this year's performance, still has room to grow".

While the present gold price reflects the prevailing macroeconomic consensus and points toward a range-bound performance, the report stated that softer economic growth, accommodative policy stance, and ongoing geopolitical risks are more likely to support gold rather than create downward pressure.

The report noted that despite the possibility of a bearish scenario, investors are likely to maintain some exposure to gold due to the unpredictable nature of current geoeconomic dynamics.

In addition to investment demand, buying by central banks and activity in gold recycling may also provide further support.

However, the report cautioned that under certain conditions, these factors could also turn into headwinds. This highlights the growing need for scenario-based planning as the diversity of possible outcomes continues to expand.

The World Gold Council said that in a global environment where shocks and surprises are becoming more frequent, gold's ability to provide diversification and protection against downside risks remains highly relevant for investors.

After setting more than 50 all-time highs and rising over 60 per cent by the end of November, gold has stood out as one of the strongest-performing assets in 2025.

The report stated that this historic rally, set to become gold's fourth strongest annual return since 1971, has been supported primarily by two macro-level drivers, a supercharged geopolitical and geoeconomic environment and generalised US dollar weakness, along with marginally lower interest rates.

In the domestic market, gold prices have rallied more than 66 per cent over the past one year and are currently trading at approximately Rs 130,540 per 10 grams for 24 karat, reflecting the strong demand and market confidence in the yellow metal.

Times of Oman