Gold Price Outlook Supported By Asian Investment Demand Despite Slower ETF Flows, Says WGC

Investment demand is likely to remain the key pillar supporting the gold price during the second half of 2026, although the World Gold Council (WGC) does not expect demand to match the exceptionally strong levels recorded in 2025. In its latest outlook, the council said the composition of investment demand is changing, with Asia and over-the-counter (OTC) markets expected to play a larger role as exchange-traded fund (ETF) flows remain sensitive to interest rate expectations.

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Investment Pattern Shifts Across Regions

According to the WGC, investment demand is expected to stay constructive even as higher real yields continue to influence investor allocation decisions in North America and Europe. The council said OTC activity and Asian investment are likely to provide greater support to the gold price, while ETF inflows in Western markets remain dependent on monetary policy expectations, real yields and movements in the U.S. dollar.

Markets are currently pricing in one U.S. interest rate hike in October 2026. The WGC noted that the U.S. 10-year Treasury Inflation-Protected Securities (TIPS) yield has moved closer to 2.5%, a level that historically raises the opportunity cost of holding non-yielding assets such as gold.

Softer Dollar Could Support Gold

The council said several factors could improve investment demand later this year. These include a weaker U.S. dollar, tighter credit conditions and any deterioration in equity market sentiment. Seasonal portfolio rebalancing, lower summer trading volumes and volatility linked to the U.S. mid-term election cycle may also support the gold price during the second half of the year.

The demand for gold bars and coins will probably slow down after a strong first half of 2026. However, the geopolitics uncertainties and the concerns related to inflation will likely keep supporting the buying of physical gold.

Asia Expected To Remain A Key Driver

The WGC expects Asian investors to contribute a larger share of global demand in the coming months.

In China, low domestic interest rates, weakness in the property market, geopolitical risks and a tax framework favourable to investment products are expected to keep physical investment demand resilient. Continued purchases by the country’s central bank may also reinforce investor interest, although jewellery demand is expected to recover gradually as consumers continue to prefer bars and coins.

India is also expected to remain relatively resilient despite elevated gold price levels. According to the council, investors have continued adding to their holdings during price corrections. While increased prices may reduce jewellery consumption, more and more people are buying light-weight and investments-based jewellery. The WGC added that a weaker-than-normal monsoon could affect rural incomes and influence demand.

Central Banks Continue To Add Gold

The council expects central banks to remain significant buyers as they continue diversifying foreign exchange reserves and managing inflation, geopolitical and financial risks. Although annual purchases may fall below 2025 levels after slower buying in the first quarter, reserve managers continue to treat gold as a long-term strategic asset.

On the supply side, the WGC said mine production is expected to increase gradually as higher prices support output, though operational constraints and lengthy project timelines are likely to limit growth. Gold recycling is also expected to rise only modestly, as expectations of further gains in the gold price, limited near-market inventories and financing options such as gold-backed loans in India continue to discourage large-scale selling.