Can Gold Keep Rising ? A 2026 Reality Check

Gold ended 2025 with one of the strongest rallies in recent memory, more than doubling in value from the start of the year, and it carried that momentum into 2026. Prices briefly climbed above $5,500 per ounce, reflecting deep structural demand from central banks and investors alike. According to the World Gold Council, total gold demand hit an all-time high in 2025, with strong flows into investment and reserve buying underpinning the record run. At its core, this rally has been driven not by short-term speculation but by a broad reassessment of gold’s role in global portfolios. Central banks around the world have continued to diversify away from reliance on the U.S. dollar, adding significant quantities of gold to their reserves as a hedge against currency and geopolitical risks. Consensus estimates suggest that they could continue to accumulate around 800–1,000 tonnes through 2026, amounting to roughly 26% of annual mine supply a structural demand base that is difficult for markets to ignore.

Institutional investors beyond central banks have also played a big part. Exchange-traded products tied to gold have seen sizeable inflows, and physical demand remains strong. This reflects broader fears about inflation, fiscal deficits, and financial market instability, prompting many traditional and new investors to treat gold as more than just a hedge increasingly as a core defensive asset alongside equities. However, the start of 2026 has reminded markets that gold is not immune to volatility. A sharp sell-off late last week driven by news of a potential Federal Reserve leadership pick perceived to be more hawkish sent prices tumbling by double digits in a single session. Major futures exchanges even raised margin requirements after some of the steepest one-day declines in gold and silver in decades, underscoring how sentiment and positioning can trigger rapid swings even in a structurally bullish market.

Structural Drivers vs. Short-Term Risks

One of the key reasons many analysts believe gold still has room to run in 2026 is the persistence of demand drivers that go beyond simple momentum. Central bank purchases remain elevated, and strategic reserve diversification continues to be a priority for many countries navigating geopolitical uncertainty and rising global debt. This sets a long-term floor under prices that doesn’t disappear overnight.

At the same time, macroeconomic conditions such as expectations of lower real interest rates and a historically weak dollar make gold more attractive relative to fixed-income assets. When yields on bonds appear unattractive and confidence in fiat currencies wavers, gold’s appeal as a store of value strengthens. Recent trends show that, even after steep corrections, gold prices are still significantly higher than they were at the start of the year a sign that longer-term bullish forces remain in play.

Nevertheless, short-term risks are evolving. If global inflation cools faster than expected or if central banks signal tighter monetary policy, these developments could curb speculative interest and dampen price momentum. Some market forecasters have recently dialed back their 2026 year-end targets from earlier projections, suggesting that while gold will remain well-supported, outsized gains like those seen in 2025 may not repeat.

What This Means for Investors

For long-term investors, gold’s narrative in 2026 is shifting toward a structural story of diversification and risk hedging rather than a simple breakout rally. The sharp rise in 2025 reflected years of accumulated pressures weakening real yields, geopolitical tension, and strategic reserve accumulation. Those fundamentals haven’t vanished, but they may evolve more gradually this year.

Volatility spikes like this week’s price swings remind investors to expect choppy markets, especially as macroeconomic data and policy decisions such as interest rate guidance from the Federal Reserve continue to surprise. For many portfolio managers, a balanced approach that includes both gold and growth assets remains a favoured way to navigate uncertain markets.

In short, while gold’s pace of ascent may moderate, the underlying demand picture remains supportive and gold’s role as a hedge and strategic reserve asset is likely to persist through 2026 and possibly beyond.