Investing.com — Gold could resume its advance during the second half of 2026 if the Federal Reserve avoids further rate increases, investment demand recovers, and central banks maintain strong purchases, UBS strategists said. <\/p>\n
The metal traded near $4,077 an ounce on July 30 after weakening in recent months. Softer investment and jewellery demand, combined with higher mine supply, has limited upward momentum. <\/p>\n
World Gold Council data showed bar-and-coin demand fell to 307 metric tons in the second quarter from more than 400 tons in each of the previous two quarters. <\/p>\n
Investment demand excluding over-the-counter transactions declined to 262 tons from 487 tons a year earlier, reflecting outflows from gold-backed exchange-traded funds. <\/p>\n
Central-bank purchases offered stronger support, reaching 289 tons in the second quarter. First-half buying totalled about 345 tons, equivalent to an annualised rate of 700 tons. <\/p>\n
For gold to remain above $4,000, investment inflows must recover, and official-sector demand needs to stay close to 300 tons per quarter, according to the analysis. <\/p>\n
Monetary policy remains the main catalyst. Markets are pricing possible Fed rate increases this year, leaving near-term risks tilted to the downside and creating room for a pullback towards $3,850. <\/p>\n
A decision to keep rates unchanged, followed by cuts in early 2027, could revive demand. Lower real yields would reduce the opportunity cost of holding non-interest-bearing gold and could weaken the U.S. dollar. <\/p>\n
Dollar diversification and concerns about inflation would provide further support for gold’s role as a reserve and safe-haven asset. <\/p>\n
Mine production rose to 966 tons in the second quarter from 948 tons a year earlier. Recycled supply fell to 326 tons from 374 tons in the first quarter, offering some offset to higher production. <\/p>\n
The forecast places gold at $4,400 by September and $4,600 by December. Prices are then projected to reach $5,000 in March 2027 and $5,200 by June. <\/p>\n
Weakness towards $3,850 could provide an entry point for long-term investors, though the near-term outlook remains cautious. <\/p>\n
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