Gold is currently in a “loading the spring” phase, setting the stage for a sharp upward move over the coming months, according to WisdomTree’s head of commodities research, Nitesh Shah.
Following an intra-day peak of $3,500 an ounce on 22 April 2025, gold has traded within a relatively tight range between $3,180 and $3,400 an ounce.
While short-term weakness below the 76.4% Fibonacci retracement level at $3,180 appears possible, WisdomTree expects solid support near the 61.8% retracement level at $3,024.
From there, the precious metal is forecast to rebound strongly, potentially reaching $3,850 an ounce by the second quarter of 2026.
The firm highlights several macroeconomic risks that underpin gold’s bullish outlook. Trade uncertainty remains a key concern.
Truce, but no accord
President Trump recently extended the ‘trade truce’ deadline to 1 August, but negotiations with Canada, Mexico and the European Union continue, with some preliminary deals introducing higher tariffs than previously seen.
Gold’s role as a hedge against adverse trade developments is therefore likely to remain relevant.
Government debt trajectories also support the case for gold.
The recently passed One Big Beautiful Bill Act includes unfunded tax cuts expected to add $2.4 trillion to US deficits between 2025 and 2034, pushing debt as a share of GDP from 117.1% to nearly 124%.
Historically, rising government indebtedness has correlated with stronger gold prices, especially amid concerns about debt sustainability.
WisdomTree warns of mounting political pressure on the Federal Reserve, noting President Trump’s criticisms of Fed Chair Jerome Powell, whose term expires in May next year.
Fed' independence threat
This raises risks to central bank independence reminiscent of the late 1970s, when weakening institutions and high inflation propelled gold to historic gains.
While Chairman Paul Volcker later reversed that trend by engineering two recessions, gold has historically performed well during such downturns.
Geopolitical tensions remain acute, with Iran suspending cooperation with the International Atomic Energy Agency following US and Israeli strikes, and the Russia-Ukraine conflict showing little sign of resolution. Such risks typically boost demand for safe-haven assets like gold.
Another key factor is the ambiguous US dollar policy. While no explicit dollar debasement programme exists, moves by the administration hint at a ‘soft-dollar’ approach that could shock the global economic system.
Debt credibility issue
In such a scenario, gold would benefit significantly, especially if US debt credibility deteriorates.
WisdomTree’s gold price model has struggled to capture recent dynamics fully, partly due to rising central bank gold purchases and shifting investor interest towards physical bullion in Asia, particularly China.
Trading data also shows increasing price moves outside London hours, reflecting growing Asian influence.
Under consensus forecasts, inflation is expected to remain above the Federal Reserve’s target, 10-year bond yields are set to hold steady, and the US dollar is forecast to weaken modestly.
This combination should see gold prices moderate initially before surging to a new all-time high in early 2026.
In a bull case, harsher tariff shocks could force the Fed to cut rates, driving inflation and a weaker dollar and pushing gold to as high as $4,475 an ounce.
Bear case
Conversely, a bear scenario with inflation returning to target and a stronger dollar could see gold fall to around $2,700 an ounce, though still above 2025’s starting levels.
WisdomTree also revisits a ‘Mar-a-Lago Accord’ scenario, modelling a sharp 23% dollar depreciation over a year. This extreme case, involving turbulent bond markets and soaring inflation, could propel gold to as much as $5,355 an ounce by mid-2026.
For investors, the current period looks like a spring being compressed, soon to release substantial upward pressure on gold prices, the research concludes.