Gold prices have cooled off after a historic run. However, that doesn’t mean the gold trade is broken.
The World Gold Council’s Q1 2026 Gold Demand Trends report and outlook showed a complex setup in which prices have pulled back from record highs. At the same time, the forces driving the rally haven’t gone away.
For context, gold has cooled off lately, slipping back into the mid-$4,500s, forcing investors to rethink the rate-cut trade.
The latest pressure comes after the Federal Reserve held rates steady.
Markets so far are interpreting it as a reminder that policymakers are still sweating inflation. Higher rates and firmer yields make gold a lot less attractive.
However, gold doesn’t trade on just one factor.
It’s the most popular safe-haven investment, which means it draws buyers when they’re worried about inflation and geopolitical risk.
The World Gold Council’s outlook underscores that exact same tension.
It argues that geopolitical risk remains a critical driver of demand in 2026, while central bank buying, ETF flows, and bar-and-coin demand will continue to support the market.
Nevertheless, the problem remains price.
High gold prices continue to pressure jewelry demand, and supply is likely to rise only modestly.
Junko Kimura/Bloomberg via Getty Images
Gold demand sends a mixed signal
The World Gold Council’s Q1 report shows the king metal is still in good shape, but things aren’t that simple.
For perspective, total gold demand rose 2% year-over-year to 1,231 tonnes.
That relatively modest volume growth became much more dramatic when prices surged to record highs. Consequently, the value of quarterly demand skyrcocketed 74% to a record $193 billion.
Three trends in particular stood out:
- Bar and coin demand skyrocketed 42% to 474 tonnes, the second-highest quarter on record.
- Central banks scooped up 244 tonnes, up 3%, even though there was more selling during the quarter.
- Jewelry demand tanked 23%, showing record prices are squeezing traditional buyers.
The report also notes that the LBMA gold price averaged a record $4,873 an ounce in the quarter, hitting a record high of $5,405 before pulling back.
Gold price performance
- Gold fell $54.53, or 1.17%, over the past 30 days.
- Gold rose $591.47, or 14.78%, over the past six months.
- Gold gained $1,285.81, or 38.87%, over the past year.
- Gold climbed $2,825.03, or 159.69%, over the past five years.
- Gold surged $3,939.65, or 602%, over the past 20 years.
Source: Goldprice.org
Wall Street’s latest price targets on gold
- Wells Fargo Investment Institute: $6,100 to $6,300 by the close of the year.
- Commerzbank: $5,000 by year-end 2026.
- J.P. Morgan: $6,300 by Q4 2026.
- BNP Paribas: $5,620 average for 2026, peaking above $6,250 possible by year-end.
- Citi Research: $5,000 near-term price target.
- Macquarie Group: $4,323 average for 2026.
- Morgan Stanley: $5,200 per ounce, down from $5,700 in the back half of 2026.
Source: Reuters.
Gold outlook stays supported but strained
The WGC’s outlook shows that the shiny yellow metal’s market is still well supported but is increasingly constrained by higher prices.
The report shows that geopolitical factors still remain at the core of gold demand in 2026 and beyond, and it’s exactly that risk premium that’s helped lift gold prices in recent years.
The setup boils down to three forces:
- Rates and bonds: Government bond yields will likely remain elevated until there is clarity on policy rates.
- Investment demand: ETFs and OTC demand could stay positive, though below last year’s levels.
- Physical demand: Bar-and-coin buying may remain resilient, especially in Asia.
Central-bank demand is arguably one of the most obvious supports.
The Council expects full-year official buying to hover around 2025 levels, with a target range of 700 to 900 tonnes.
However, gold’s incredible ascent continues to pressure jewelry tonnage, even as spending levels remain relatively resilient.
Mine production is only expected to rise modestly in 2026, while recycling is picking up again. If prices stabilize, the recycling jump is more than a one-quarter event.
SPDR Gold Shares vs. the S&P 500 returns
- YTD: SPDR Gold Shares (GLD) is up 8.47%, while the SPDR S&P 500 ETF Trust (SPY) is up 5.16%.
- 2025: GLD returned 63.68%, while SPY returned 17.72%.
- 2024: GLD returned 26.66%, while SPY returned 24.89%.
- 2023: GLD returned 12.69%, while SPY returned 26.18%.
- 2022: GLD fell 0.77%, while SPY fell 18.18%.
- 2021: GLD fell 4.15%, while SPY gained 28.73%.
- 2020: GLD returned 24.81%, while SPY returned 18.33%.
Source: TotalRealReturns.
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