World Gold Council sees precious metal remaining rangebound this year

12/01/2026 03:43 AST

Gold enters 2026 with a price that broadly reflects market-consensus macro assumptions - steady global growth, modest further Fed cuts (75 bps), a slightly firmer dollar and largely flat long-end yields. In that "status quo" set-up, the World Gold Council (WGC) sees performance as broadly rangebound.

But its scenario map is skewed to the upside if growth slips and policy eases, resulting in a 'shallow slip' between 5 per cent and 15 per cent. In case of a deeper synchronised downturn and higher geopolitical risk materialise, the global body sees a 'doom loop,' in which case prices may surge between 15 per cent and 30 per cent). Conversely, a reflationary upswing with stronger US growth, higher yields and a stronger dollar would likely pressure the metal, resulting in a drop of between 5 per cent and 20 per cent). Wildcards outside the models - central-bank buying and recycling flows - could amplify moves in either direction.

A record-setting 2025 set the stage
The backdrop to this year's debate is a historic 2025: gold notched 53 all-time highs and finished December at $4,368/oz, after peaking at $4,449/oz on December 23. December's 4.2 per cent gain capped a 67 per cent full-year advance in US dollar terms - an extraordinary run that was echoed across major currencies. The WGC's attribution points to options activity (a facet of "risk & uncertainty"), a weaker US dollar led by EM FX, and falling yields as key drivers; geopolitics loomed large throughout the year.

December report: The month that "pushed to eleven"
The WGC describes December's surge across precious metals as "historic in scale but uneven in nature." Silver and platinum bore the hallmarks of a policy-driven squeeze - tight near-market supply, steep backwardation and inflated regional premia - fuelled in part by late-month policy headlines and year-end liquidity frictions. By contrast, gold's ascent was more measured, underscoring deeper liquidity and a different driver mix. When the CME raised margins late in the month, intraday ranges in silver, platinum and palladium exploded to more than five times their 2025 average; gold's range was only about three times, highlighting its relative stability.

Under the hood, December's return was again helped by robust options activity and EM-FX tailwinds as the dollar eased versus the renminbi. For 2025 in full, the model explains roughly 60 per cent of the move, led by geopolitical risk and options activity from late summer into autumn, with dollar weakness and modestly lower yields supporting. The residual reflects factors the model doesn't explicitly capture - most notably persistent central-bank demand, tariff-related positioning and possible CTA/retail flows.

Flows confirmed the investment bid. Global gold ETFs chalked up a seventh straight month of inflows in December, led by North America. Managed-money net longs in futures increased into year-end, even as tonnage over the full year was volatile. Meanwhile, the WGC reiterates gold's strengthening role as the haven of choice in geopolitical shocks since 2022, overtaking the US dollar's pre-2022 primacy in such episodes. Its analysis links a 100-point rise in the Geopolitical Risk Index to a roughly 2.5 per cent short-term lift in the gold price.

Near-term, the WGC flags a few transitory frictions: spillbacks from white-metal volatility, early-January commodity index rebalancing, and the possibility that price-driven recycling nudges higher - though gold has, so far, resisted a material recycling spike. The Supreme Court's pending ruling on the use of IEEPA for tariffs is another swing factor: validating tariffs could entrench policy risk (supportive for hedging demand); constraining them could lower that policy premium but refocus attention on fiscal deficits - also potentially gold-friendly. Either way, the Council views the tariff channel as nuanced but net-supportive for gold.

How that funnels into 2026
Translating December's lessons into the new year, the WGC frames four pathways:

Macro consensus (base case): stable global growth (2.7 per cent-2.8 per cent), 75 bps more Fed easing, flat 10-year yields and a slightly stronger US dollar rangebound gold.

Shallow slip: softer growth, deeper cuts, weaker dollar and risk-off positioning  moderately bullish (+5 per cent to +15 per cent).

Doom loop: synchronised slowdown, aggressive easing, lower long yields and elevated geopolitical stress  bullish (+15 per cent to +30 per cent), with scope for ETF inflows to accelerate from still-modest levels versus prior bull cycles.

Reflation return: stronger-than-expected US growth, higher yields and a firmer dollar  bearish (-5 per cent to -20 per cent).

Central-bank demand (still below advanced-economy reserve shares in many EMs) and recycling remain the key wildcards: a renewed official-sector buying spree and muted recycling would buttress prices; a policy-driven pullback in purchases or forced collateral liquidations (e.g., in India) would add headwinds.

Bottom line
After a year of 53 record highs and a 67 per cent surge, gold's core supports - policy uncertainty, persistent geopolitical risk, and an active investment bid - remain in place. If 2026 hews to consensus, prices may mark time. But with tail-risks multiplying and real rates and the dollar still cyclically high, the skew looks friendlier on dips than on rips. In a world where surprises are the rule, gold's portfolio role as a diversifier and downside hedge stays compelling.

Khaleej Times