Gold still attractive in an uncertain world

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Gold has had a very volatile start of 2026. Prices rose sharply and then fell just as strongly. In the short term, the gold price is mainly influenced by interest rates, movements in the US dollar and news about global conflicts. However, the main reasons why gold has risen in recent years, including geopolitical tensions, rising government debt and continued demand from central banks, are still present. For the rest of 2026, ABN AMRO therefore expect a period of consolidation first, followed by opportunities for further gains.

Inflation worries and rising interest rates

One important driver for gold is uncertainty in the global economy. The conflict in the Middle East has pushed energy prices higher. This tends to lead to higher inflation, while economic growth may slow. As a result, interest rates tend to rise and the dollar becomes stronger, as investors move into the dollar as a safe haven in times of uncertainty. Both developments can weigh on gold in the short term. Higher interest rates make gold less attractive as it does not pay interest like savings accounts or government bonds. At the same time, a stronger US dollar reflects increased demand for safety, which can reduce the need for alternative safe-haven assets such as gold.

Long term uncertainty remains supportive

Over the longer term, the same environment can actually be positive for gold. If higher inflation starts to weigh on economic growth, governments and central banks often take measures to support growth, for example by lowering interest rates, loosening financial conditions or providing fiscal support. And in times of uncertainty, gold tends to become more attractive due to its role as a portfolio diversifier.

Central banks remain a source of demand

Central banks also play an important role. Earlier this year, some investors worried that central banks might start selling gold, particularly after reports about Turkey. Following the outbreak of the war in Iran, Turkey’s central bank sold around 60 tonnes of gold, worth more than USD 8 billion, in a short period of time. However, this appears to have been an exceptional case as central banks as a group continue to buy gold. They do so to reduce dependence on other currencies and to spread risks. Central banks think mainly in the long term, and gold sales are therefore usually temporary rather than structural. 

China supports the gold market

After the price decline early in 2026, many investors reduced their gold positions. In particular, gold ETFs in Europe and the US were sold by retail investors, because these tend to respond quickly to changes in market sentiment and concerns about rising interest rates.

China is different. Demand for gold remains strong there. Gold prices in China are often higher than global prices, showing strong demand. New regulations and savings plans are encouraging more Chinese individuals and institutions to invest in gold. China is therefore very important for the gold market. Both private individuals and large investors are buying more gold. Trading on the Chinese gold exchange is increasing, and gold can be imported easily. This helps prevent sharp declines in the gold price.

Geopolitical tensions

Developments in the Middle East mainly affect gold through short term market reactions. If tensions persist or escalate, gold prices are likely to remain volatile. Over the medium to longer term, however, the outlook stays positive. Persistent geopolitical stress raises stagflation risks and strengthens strategic demand from central banks and longterm investors, supporting the case for new highs over time. If tensions ease, gold could see near term consolidation or a pullback as safe haven demand fades and real rates regain influence. Even then, easing tensions does not undermine the structural bull case for gold, as diversification needs and macro uncertainty remain. Overall, ABN AMRO see short term weakness in either scenario as tactical noise, with pullbacks providing opportunities to build longer term gold positions.

Conclusion

For the rest of 2026, ABN AMRO expect the gold price to continue fluctuating at first. This is due to uncertainty about inflation, geopolitics, interest rates and economic data. In the medium term, the outlook is positive. Many investors still hold little gold in their portfolios, geopolitical tensions remain high, and there are concerns about high national debt and a lack of confidence in economic policy, particularly in the US. For these reasons, gold remains attractive as a diversifier in the portfolio.

This market comment was provided by Jan Wirken, Equity Research & Advisory Expert at ABN AMRO.

All views, opinions, and analyses in this article should not be interpreted as personal investment advice. Individual investors should make their own decisions or seek independent advice. This article has been prepared for informational purposes and should be considered a marketing communication.