By Imaru Casanova, portfolio manager specializing in gold and precious metals at VanEck
Gold has retreated by about 25% from its January highs, but the long-term outlook continues to be underpinned by inflation, central bank buying, and lower real rates.
Gold price volatility increased in the first half of 2026. Intraday, gold traded as high as $5,595 on 29 January. On 30 June, it hit its year-to-date low of $3,943, but managed to close just above the $4,000 mark, ending the month at $4,008.02 per ounce. Gold fell 14.14% in June and was down 7.21% year to date.¹ Gold stocks underperformed the metal, as is typically the case when gold prices weaken. The MarketVector™ Global Gold Miners Index (MVGDX)² fell 15.54% in June and was down 12.41% year to date. Investing involves risks, including possible loss of capital.
After reaching fresh all-time highs near $5,600 an ounce in early January, gold prices came under downward pressure, driven by a stronger US dollar and rising interest rate expectations since the start of the war with Iran. The dominant macro narrative has become self-reinforcing: higher oil prices keep inflation expectations elevated, elevated inflation expectations keep the Federal Reserve (“Fed”) on hold, a Fed on hold keeps real yields high, and high real yields support the US dollar, which in turn weighs on gold.
As a result, many commodity analysts have revised their 2026 gold price forecasts lower. Even after those cuts, however, the current average consensus estimate, according to Bloomberg data, for gold’s annual average price stands at around $4,700 for 2026 and 2027, and above $4,000 for 2028 and 2029. Analysts at Goldman Sachs, Citigroup, and Deutsche Bank expect gold to reach $5,000 or more in 2027.³
At the end of June, the apparent end of the conflict in the Middle East further reduced gold’s appeal as a safe haven, as markets shifted toward a more risk-on environment and equities traded close to recent highs. Gold now trades around $4,000 an ounce, roughly 25% below its January peak. Even so, gold stocks remain one of the best-performing asset classes over the past year, while gold continues to outperform most other major asset classes.
Source: Morningstar. Data as of end-June 2026. “Gold Stocks” is represented by the MV Global Gold Miners Index (net of fees). “U.S. Stocks” is represented by the S&P 500 Index. “EM Stocks” is represented by the MSCI Emerging Markets Index. “REITs” is represented by the FTSE NAREIT All Equity REITs Index. “International (Int’l) Stocks” is represented by the MSCI AC World ex USA Index. “Commodities” is represented by the Bloomberg Commodity Index. “U.S. TIPS” is represented by the Bloomberg U.S. TIPS (1-3 Year) Index. “U.S. Bonds” is represented by the Bloomberg U.S. Aggregate Bond Index. “International (Int’l) Bonds” is represented by the Bloomberg Global Aggregate ex US Index. Past performance is no guarantee of future results. It is not possible to invest directly in an index. Investing involves risks, including the possible loss of capital.
Gold price volatility and the recent pullback may weigh on investors. However, we believe it is important to look past the short-term noise. The continued resilience of equity markets points to a degree of optimism that may be tested. Geopolitical tensions, the lingering effects of the conflict in the Middle East, and the inflation outlook remain key factors in the current environment.
A prolonged “Fed on hold” environment could, over time, contribute to lower — or even negative — real rates, a backdrop that has historically been among the most supportive for gold. In such a scenario, gold has often played an important role as a diversification tool and potential hedge for investors seeking portfolio protection. Gold stocks can also play a role in a diversified allocation. There is, however, no guarantee that this backdrop will persist: real rates could rise again, gold generates no income and may experience significant or prolonged price declines, and it may not serve as an effective hedge or diversifier over any given period.
Even Fed rate hikes have not always been negative for gold. According to World Gold Council data covering 44 Fed hikes between March 1997 and July 2023, gold posted a positive return on the day of the increase in more than 50% of cases. These figures reflect only historical results over a specific period; past performance is not a reliable indicator of future results, and gold could react differently to future changes in interest rates.
Central bank gold-buying statistics for May, also published by the World Gold Council, show that central banks remain committed to gold, with monthly net purchases close to record levels; 89% of surveyed central bankers expect global gold reserves to increase over the next 12 months.
Sustained and geographically diversified buying from central banks, combined with resilient investment demand from Asia, continues to support gold demand at current levels. A return of Western investor participation, similar to what was seen in 2025, could provide additional support and help drive another leg higher in the gold market. That said, such demand momentum is not guaranteed, and both central bank purchases and investment demand could slow or even reverse. Historically, gold has performed well during periods when central bank activity and investment together accounted for more than 30% of total demand (see chart below; source: Gold Mid-Year Outlook 2026: Point Break, World Gold Council).
Source: World Gold Council, as of end-June 2026.
Historically, gold stocks have outperformed the metal itself in rising gold price environments. It is worth noting that the current gold price backdrop has already proven supportive of strong corporate fundamentals, with Q1 2026 results showing record cash flows. Since the start of 2026, gold has traded at an average price of around $4,700 per ounce. With all-in sustaining costs for the sector estimated at less than $2,000 per ounce on average in 2026, margins remain very healthy, even with gold at $4,000. This gives companies room to fund growth, pay dividends, and buy back shares. Gold stocks continue to trade at valuations that remain low by historical standards, while the sector appears to be benefiting from robust financial and operational health. Current share prices seem to reflect more cautious assumptions than those implied by prevailing gold prices. Gold stocks also carry risks beyond those of the metal itself, including operational, cost, financing, jurisdictional, and company-specific risks; they have also historically been more volatile than gold — as seen in the first half of 2026, when gold stocks fell more sharply than the metal as prices declined.
If investors rotate capital away from sectors trading at much richer valuations, particularly in an environment of rising downside risk, gold stocks could benefit.
1 World Gold Council (30.06.2026)
2 MarketVector (30.06.2026)
3 Source: Bloomberg. For illustrative purposes only. Not a forecast of future results. Past performance is no guarantee of future results. Forecasts are not a reliable indicator of future performance.
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