Gold Enters H2 on Uncertain Footing as Central Bank Demand Remains Strong

Gold entered the second half of 2026 in a consolidation phase as investors weighed improving economic conditions against persistent inflation and evolving monetary policy expectations. Last week, weaker US employment and manufacturing data reduced expectations of additional Federal Reserve tightening, while easing inflation in the eurozone and stronger economic activity in China and Japan supported a more balanced global outlook. Equity markets advanced, Treasury yields edged higher, and both the US dollar and oil prices weakened, providing modest support for precious metals.

After an exceptionally volatile first half of the year, gold appears to be trading near levels consistent with expectations of moderate global growth, easing—but still elevated—inflation, and only limited additional central bank tightening. Under this consensus outlook, gold is expected to remain largely range-bound in the near term. However, renewed geopolitical tensions, weaker economic growth, or a shift toward more accommodative monetary policy could trigger another upward move. Conversely, stronger growth and rising yields may pressure prices further, although analysts expect bargain-hunting demand to emerge should gold decline more than 10% from current levels.

A key source of long-term support continues to come from central banks. Official sector purchases totaled a net 41 tonnes in May, led by Poland, China, Uzbekistan, and Kazakhstan. The World Gold Council also reported that 89% of central banks expect global gold reserves to increase over the next year, while a record 45% anticipate expanding their own holdings. Although silver experienced similar short-term price pressures, robust industrial demand from renewable energy, electronics, and technology sectors continues to underpin its long-term outlook, reinforcing the positive fundamentals across the precious metals market.