Gold enters 2026 after one of the strongest years in its modern history, rising more than 60% in 2025 and setting over 50 record highs. The surge placed the metal ahead of all major asset classes and delivered its best performance since 1979. Now, investors are assessing whether gold can extend its momentum over the next year or whether the market is nearing a turning point.

Analysts say the 2025 rally was the product of several overlapping global forces. Persistent geopolitical risks, trade uncertainty, a softening US dollar, and expectations of lower interest rates all helped drive demand. Central banks also played a decisive role by continuing to absorb large volumes of gold, keeping official-sector buying well above pre-pandemic levels.

Data from the World Gold Council (WGC) highlights how these factors contributed to the metal’s rise. Geopolitical tensions alone added roughly 12 percentage points to year-to-date performance, while a weaker dollar and modestly lower rates provided another 10 points. Economic expansion and investor positioning also offered meaningful support.

Looking ahead, the WGC expects many of the same pressures to influence the market in 2026. But it cautions that gold begins the year from a very different starting point. Prices have already factored in broad expectations of steady global growth, moderate rate cuts, and a stable dollar. With real interest rates no longer falling sharply and momentum cooling, the Council describes gold as fairly valued at current levels.

In its central outlook, the WGC projects gold trading in a narrow band next year, with returns likely ranging between a 5% decline and a 5% gain. The group notes that investor sentiment is balanced rather than defensive, reducing the likelihood of outsized moves unless economic conditions shift significantly.

Three alternative scenarios could force a deviation from this baseline. In a mild economic slowdown marked by extra US rate cuts, gold could rise 5% to 15% as investors position more cautiously. A deeper recession could push gains even higher, with the WGC estimating a potential 15% to 30% jump driven by aggressive policy easing and renewed safe-haven flows. On the other hand, if pro-growth policies from the Trump administration lift yields and strengthen the dollar, gold could fall 5% to 20% as opportunity costs rise.

Despite the WGC’s measured tone, major Wall Street institutions remain bullish. J.P. Morgan Private Bank expects prices to climb to between $5,200 and $5,300 per ounce, while Goldman Sachs forecasts around $4,900. Deutsche Bank and Morgan Stanley also see room for appreciation, though both acknowledge possible volatility in the coming months.

Much of this optimism is tied to ongoing demand from central banks, especially in emerging markets, and the belief that many global investors remain underexposed to gold. Softening real yields and persistent geopolitical uncertainty are also seen as supportive.

At the same time, risks could hinder further gains. A stronger US economy, renewed inflation pressures, or reduced central bank buying could weigh on the market. Rising supply from recycled gold, particularly in India where the metal is widely used as collateral, may also place pressure on prices.

While a repeat of 2025’s dramatic rise appears unlikely, analysts agree that gold enters the new year from a position of strength. Its reputation as a hedge during unpredictable times remains firmly intact, keeping it central to many investors’ long-term strategies.