Gold Eyes Recovery After Worst Quarter in 13 Years—What’s Next?

After booking 2025 as one of the best years in history, gold concluded the first half of 2026 around 7.5% in the red.

The metal left investors weighing whether it’s preparing for another leg higher or settling into a prolonged consolidation phase.

Early on, gold’s rapid ascent accelerated amid heightened geopolitical risk, but then the U.S.-Iran conflict sent realized volatility above 50%.

Although volatility has since eased below 30%, it remains above its long-term average. “There’s pressure on gold because people are not seeing much light at the end of the tunnel,” Marex analyst Edward Meir said, according to CNBC, referring to the macroeconomic fallout from the Middle East conflict.

With war-driven inflation and surging energy prices, the market had to adjust to higher interest rate expectations.

Rising yields and a stronger dollar weigh on non-yielding assets.

Even so, the recent correction left gold ahead of many traditional asset classes over the past 12 months.

While the metal is on course for its weakest quarterly performance in 13 years, its longer-term performance suggests investors continue to view it as an effective hedge against geopolitical risk and macroeconomic uncertainty.

Balance of Risks The latest World Gold Council report shows an even balance of risks in the second half of 2026.

The group believes current prices broadly reflect expectations for moderate global growth, cooling—though still elevated—inflation, and only limited additional central bank tightening.

Under that baseline scenario, gold is likely to remain relatively rangebound within roughly 5% of current levels.

The breakout case, however, remains firmly on the table.

Renewed geopolitical shocks, weaker-than-expected economic data, or a decisive shift towards lower interest-rate expectations could reignite investor demand.

Continued structural buying from Asian investors and central banks, alongside renewed dip-buying after the recent correction, could also provide meaningful support.

Meanwhile, stronger U.S. economic growth, a firmer dollar, and rising interest rates beyond current expectations would extend the pressure on the metal, encouraging further consolidation. “In this context, our macro-based scenario analysis suggests that gold could resume its upward trend around $4,500/oz, but only a strong, clear signal may push it sustainably towards $5,000/oz,” the World Gold Council noted.

Short-Term Downtrend Persists Examining the daily gold chart, there are a few important things to note.

Gold daily chart, Source: TradingView Gold still remains in a downtrend, making lower highs and lower lows.

Holding a psychological level of $4,000 per ounce is encouraging, but it’s hard to get optimistic without first clearing the upper trendline and recapturing the previous high of $4,375.

The 200-day moving average sits a bit above, around $4,480.

Meanwhile, on the downside, important levels are at $3,800 and $3,600.

However, a key level to watch is $3,450.

That level served as multi-month resistance through most of 2025, implying potential for strong support in the event of a further breakdown.

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