The Australian gold share market is experiencing a positive surge this Tuesday, with the S&P/ASX All Ords Gold Index (ASX: XGD) seeing a 1% uplift at the time of this report. This upturn coincides with a broader recovery in the gold price, which is currently trading close to a one-week high of $5,048 per ounce.
The precious metal’s journey this year has been a dynamic one. After reaching a record high of US$5,608 per ounce on 27 January, the market saw a significant sell-off commence two days later. This downturn was largely attributed to news of a hawkish nominee for the Federal Reserve chair, which triggered profit-taking across commodity markets. Despite this correction, the gold price demonstrated remarkable resilience, achieving a 27% increase in 2024 and a substantial 65% jump in the preceding year. Even with the recent volatility, the yellow metal has managed to maintain an impressive 16.7% gain in 2026 so far.
What’s Next for the Gold Price?
The outlook for the gold price in the coming months is a subject of keen interest, with experts offering a range of predictions. Among the most optimistic is Julia Du from the Industrial and Commercial Bank of China (ICBC), a colossal multinational bank with total assets valued at $6.6 trillion according to S&P Global.
Du forecasts that the gold price could potentially breach the US$7,000 per ounce mark within this year. Her rationale is rooted in an expectation of heightened geopolitical risks and robust demand for safe-haven assets throughout 2026. She anticipates that central banks will continue to bolster their gold reserves, institutional investors will increase their portfolio allocations towards the precious metal, and retail demand, particularly from Latin America, will remain strong. Coupled with anticipated interest rate cuts from the Federal Reserve, these factors paint a bullish picture for gold. While temporary easing of geopolitical tensions might lead to price pullbacks, Du believes that strong underlying buying interest will likely cap any significant downside.
Du’s projection places her as one of the most optimistic forecasters featured in the 2026 LBMA Annual Precious Metals Forecast Survey. She specifically predicts a peak price of US$7,150 per ounce for 2026, with a potential low of US$4,100 per ounce during brief corrections, similar to the recent market dip.
Broader Analyst Consensus
Du is not alone in her assessment of gold’s potential to surpass the US$7,000 per ounce threshold. Analysts at UBS also see this as a plausible scenario under favourable market conditions. In a recent note, UBS strategists Wayne Gordon and Giovanni Staunovo suggested that the gold price could trade as high as US$7,200 per ounce, while acknowledging a downside scenario target of US$4,600 per ounce, representing a move of approximately one standard deviation.
The UBS team highlighted that a hawkish pivot by the Federal Reserve could increase downside risks, whereas a significant escalation in geopolitical tensions might push the price closer to their upside target. Reflecting their positive outlook, UBS currently rates gold as “Attractive” and maintains a long position within their global asset allocation strategies.
Key Drivers for Gold in 2026
Julia Du has identified three primary drivers expected to influence the gold price throughout 2026:
Continued Central Bank Purchases:
Central banks are likely to persist with their strategic gold purchases as a hedge against escalating geopolitical risks. These acquisitions are considered to be relatively insensitive to short-term price fluctuations, indicating a long-term commitment.Increased Institutional Allocations:
Last year’s significant rally in gold prices underscored its potential to offer growth beyond its traditional role as a safe-haven asset. With the prospect of potential downturns in U.S. equities, institutional investors are increasingly likely to rebalance their portfolios by increasing their allocations to gold.Physical Gold Demand Amid Social Instability:
Growing social unrest in various parts of the world is expected to drive demand for physical gold. Consumers, particularly in regions experiencing severe currency depreciation and escalating conflicts such as Latin America, are turning to gold as a tangible store of value. This trend is also being observed globally as more individuals recognise gold’s investment merits.
Record Inflows into Gold ETFs
The global interest in gold is further evidenced by the record inflows into gold Exchange Traded Funds (ETFs). Last month alone, gold ETFs globally saw a net inflow of US$19 billion (approximately A$27.3 billion). According to the World Gold Council, these ETFs now manage a staggering US$669 billion in assets under management (AUM).
On the Australian Securities Exchange (ASX), gold ETFs also experienced strong demand, attracting a net inflow of US$202 million in January. This has pushed the local AUM for these ETFs to US$8.6 billion.
Looking back at performance, the Betashares Global Gold Miners Currency Hedged ETF (ASX: MNRS) was a standout performer among ASX ETFs holding overseas shares in 2025, delivering a total return of 149%, including dividends. The VanEck Gold Miners ETF (ASX: GDX) followed closely with a return of 144%. The Global X Physical Gold ETF (ASX: GOLD), the largest physical gold ETF on the ASX, provided a return of 54% in 2025.
