Gold Surges Over 60% in 2026 Amid Geopolitical Tensions and Rate Cut Bets

Gold has surged more than 60% so far this year, fueled by global geopolitical unrest, expectations of aggressive interest rate cuts, steady central bank purchases, a move away from the U.S. dollar, and strong inflows into gold-backed ETFs.

"Gold’s future path largely depends on rate cut expectations as we move toward 2026, as well as developments in U.S.-China relations," said Zain Vawda, analyst at OANDA’s MarketPulse. "If tensions between the U.S. and China continue to escalate without a resolution, that could be the catalyst for gold to surpass $5,000 per ounce."

This week, investors remained focused on the ongoing trade friction between the U.S. and China. On Wednesday, Washington criticized China’s expanded restrictions on rare earth exports, calling them a risk to global supply chains.

Elsewhere, former U.S. President Donald Trump announced on Thursday that he and Russian President Vladimir Putin had agreed to a new summit aimed at resolving the war in Ukraine, just one day ahead of Trump’s planned conversation with Ukrainian President Volodymyr Zelenskiy.

Markets are currently pricing in a 25 basis-point rate cut by the Federal Reserve in both October and December, with near-certain probabilities of 98% and 95%, respectively. Lower interest rates tend to boost demand for gold, which does not yield interest.

According to Vawda, any short-term declines in gold prices are likely to be brief, as bullish investors often take such opportunities to buy back in.

HSBC raised its average gold price forecast for 2025 to $3,355 per ounce on Wednesday, pointing to ongoing geopolitical risks, economic instability, and a weaker U.S. dollar as key drivers of safe-haven demand.

Meanwhile, the continuing U.S. government shutdown has paused the release of scheduled economic reports. A Treasury official warned the shutdown could result in up to $15 billion in lost economic output each week.

Spot silver advanced 1.8% to $54.04 per ounce after reaching an all-time high of $54.15 earlier in the session, supported by tight supply and gold’s upward momentum. Platinum gained 3.2% to $1,706.65, while palladium rose 4.6% to $1,606.00.