World Gold Council: If gold price stays below $4,000, further sell-offs could be triggered

On the 1st, the World Gold Council released the "Mid-year Outlook for the Global Gold Market in 2026" (hereinafter referred to as the report). The report shows that after experiencing fluctuations since the beginning of the year, gold will enter a critical juncture in the second half of the year, and its performance will be jointly affected by multiple uncertain factors such as geopolitics, the interest rate environment, and investor sentiment.

The report shows that in late January, the gold price refreshed its historical peak more than 12 times, reaching a record high of $5,405 per ounce (LBMA afternoon fixing price). However, it then dropped significantly to a low of $4,002 per ounce (LBMA afternoon fixing price) in June. This fluctuation has caused the gold price to decline by 7% since the beginning of the year, and the average volatility has risen to 30%. Despite this correction, gold remains one of the best-performing assets in the past 12 months.

The World Gold Council's short-term gold price performance attribution model (GRAM) shows that the dominant factor driving the gold price performance in the first half of the year was the rising geopolitical risks, among which the impact of the US-Iran conflict was particularly significant. In addition, potential factors such as investors' position adjustments and profit-taking behaviors also played an important role. As the market re-evaluated its expectations for interest rates and the US dollar, the impact of opportunity cost on gold performance presented a complex situation with mixed results.

It is worth noting that the report points out that most of the changes in the gold price trend are related to market activities during the Asian and US trading sessions. Among them, most of the gold price corrections occurred during the US trading session, while the gold price rebounds generally occurred during the Asian trading session. This further highlights the increasingly important role of Asian investors (and consumers) in price discovery and the direction of the gold price.

The report points out that in the context of price consolidation, the strengthening of the US dollar, the interest rate hikes exceeding expectations, and the recovery of market risk appetite are the main resistances faced by the gold price. If the gold price continues to stay below $4,000 per ounce, it may trigger further selling. However, according to historical performance, if the gold price drops by more than 10% from the current level, it may trigger the "buying on dips" demand of long-term investors in multiple regions.

Can the gold price regain its upward momentum? The report points out that if factors such as the deterioration of the economic or geopolitical environment, the reversal of interest rate expectations, and the increase in gold allocation by long-term investors are realized, then the gold price is expected to rise again. Against this background, the gold price is expected to regain its upward momentum and rise to around $4,500 per ounce, but only strong and clear signals can push it to reach $5,000 per ounce.

The World Gold Council believes that besides macro factors, central bank demand and key market policy changes may become additional "variables" for the gold price trend in the second half of the year. On the one hand, the "2026 Global Central Bank Gold Reserve Survey" recently released by the World Gold Council shows that central banks still have the willingness to continue to increase their gold holdings. The gold - buying behavior of central banks can send positive signals to investors. On the other hand, since early April, the Indian government has taken a series of measures to suppress gold imports. If the Indian economy slows down further, the willingness of Indian consumers and investors to enter the market during the gold price correction may be weakened.

Juan Carlos Artigas, CEO of the Americas region of the World Gold Council and Head of Global Research, said: "Interest rates are indeed important, and we expect them to be one of the key variables in the second half of the year; however, the performance of gold is not driven by a single factor. The gold price has faced pressure around $4,000 per ounce this year, but there have also been rebounds, mainly supported by the endogenous demand of long - term investors from multiple regions. The structural demand from global central banks, institutional investors, and consumers is the foundation that supports the resilience of gold."

The views in this article are for reference only and do not constitute investment advice. Investment involves risks, and you should be cautious when entering the market.

This article is from the WeChat official account "China News Service - Jingwei" (ID: jwview). Author: Li Ziman, Editor: Dong Wenbo, Responsible Editor: Luo Kun, Li Zhongyuan. Republished by 36Kr with authorization.