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- The price of gold has experienced big swings in 2026 after hitting a record early in the year above $5,000.
- Last week, the precious metal, along with silver, turned in its best performance in months.
- Tamer inflation data and declining odds of a Fed rate hike contributed to the rally, but short-term volatility in the gold trade may persist.
Courtesy: Kinross
In 2026, gold has been a tough trade to time right, falling from a 10-year high over $5,300 an ounce that it reached early in the year by as much as 18%, according to Goldprice.org. But last week was the precious metal’s best week since January, while gold mining stocks had their hottest five-day run since 2008. With volatility in the gold trade leaving it with a year-to-date return that is now close to flat, some are betting that the trading chart direction is going to continue up. But there are potential pitfalls ahead. After all, even with its recent dramatic moves, the price of gold is still higher by over $1,000 in the past one-year period.
“Gold is the new gold,” said Pippa Malmgren, a former Special Assistant to President George W. Bush and member of the National Economic Council.
Malmgren says what has attracted investors to gold has not changed. Many are scared that fiscal spending is out of control in the U.S. and that growth will be weak everywhere else. “This implies inflation,” Malmgren said. She added that the Trump administration’s pursuit of expensive foreign wars, as well as its embrace of cryptocurrencies, both add to uneasiness among some investors.
“This makes nervous investors turn to conservative methods for preserving value, such as buying gold,” Malmgren said. Central banks around the world, meanwhile, are expanding their gold holdings, which she says further signals a loss of confidence in fiat money, led by continued buying of gold by China.
“Central banks never stopped buying,” said Patrick Kennedy, founder and managing partner of Hartford, Connecticut-based AllSource Investment Managementd. “The PBOC added 19.9 tons in July, its largest month since October 2023 and its 21st straight month of accumulation,” Kennedy said.
That bullishness is shared by billionaire hedge fund manager John Paulson, who recently told CNBC that gold is only in early stages of a long-term rally, citing loss of faith in paper currency and runaway government spending (Paulson has been a gold bull since 2009).
watch nowVIDEO02:56John Paulson: Gold in the early stages of a long-term bull marketThe Exchange
While fear has been a driver of the gold rush mentality historically, Joe Cavatoni, senior market strategist at the World Gold Council, says he views the recent bounce among U.S. investors as more tactical in nature.
“Gold’s recent rebound appears to be driven more by changing expectations around interest rates and the economy than by fear alone,” Cavatoni said. “There are signs of weakening, particularly on the jobs front, and markets are responding quickly. As investors adjust their outlook for rates, gold is reacting the way you’d expect a highly macro-sensitive asset to respond,” Cavatoni said.
“My sense is that the U.S. flows driving this move are more tactical in nature, as we have seen GLD options activity increase, while the buying we’re seeing out of Asia and Europe tends to be stickier,” Cavatoni said, referring to flows into the SPDR Gold Shares ETF (GLD), with investors in both regions adding to their holdings.
With expectations for a rate hike from the Federal Reserve coming down after the latest inflation data was viewed by the market as tame, the appeal of gold versus other rate-sensitive assets and against a soft U.S. dollar typically increases.
“I wouldn’t view gold simply as a safe-haven asset. Many investors are using it as a wealth preservation tool and to help diversify portfolios amid ongoing uncertainty about growth and policy,” Cavatoni said.
Kennedy says that the recent flows into ETFs, which reached a six-week high, is professional money, not just retail chasing.
GLD was higher by roughly 1% on Wednesday.
Stock Chart IconStock chart icon
Performance of the SPDR Gold Shares ETF over the past five-year period.
Expectations for a rate hike were declining even before the latest inflation print, said Nick Cawley, a contributing analyst for Solomon Global, a UK-based gold and silver bullion dealer, down by over 20-percentage points in the past week.
“This suggests markets are growing more cautious about further U.S. rate increases,” he said, pointing to the recent benign trend in the inflation data and last Friday’s soft non-farm payrolls report.
Kennedy says his firm’s view was that the first half selloff in gold was a buying opportunity rather than the sign of a top. “We bought and added to GLDM off the July technical bottom,” he said, referring to another share class of GLD which has a lower expense ratio.
But he says declining expectations for a rate hike are not the same as a Fed positioned to cut. “This is not a rate cut trade, at least not yet. The Fed has been parked at 3.50 to 3.75 all year and September was genuinely live for a hike right up until the payrolls miss,” Kennedy said.
“What changed is that the hike tail risk came out of the market,” Kennedy said, noting this morning’s CPI at 0.1 percent monthly and 3.4 percent annual, with core at 2.5 percent, was in line and keeps that narrative going. “It’s a different setup than a cutting cycle, and it matters when you’re asking whether this has legs,” Kennedy added.
From a technical standpoint, last week’s move above the 50-day moving average, along with the break of this year’s pattern of lower highs, should support further gains, Cawley said, with any pullbacks expected to be short-lived and viewed as opportunities to re-enter gold’s next leg higher.
Gold miners see increased investor interest
Some traders and investors have turned to the trade in gold mining stocks in a search for value within the equities market, said Vince Stanzione, an independent trade and author of “The Millionaire Dropout.”
“Many quality mining stocks are trading on single digit forward P/Es and paying great dividends,” Stanzione said, pointing to AngloGold Ashanti and S&P 500 member Newmont. He added that many retail traders prefer to use ETFs, with the most popular being Van Eck Gold Miners (GDX), which covers the larger mining stocks, and Van Eck Junior Gold Miners (GDXJ), which covers the junior miners.
“Many gold miners also have exposure to silver as well, which moves in sync with gold,” Stanzione said. Last week, silver has its best week since February.
For retail investors, there are multiple options to implement a bullish trade on gold, according to Shawn Young, chief analyst at MEXC Research, which is a cryptocurrency trade platform. Bullion ETFs such as GLD and iShares Gold Trust (IAU) are the most direct way to express the gold view, Young said.
GLDM, the preferred gold ETF of Kennedy, has an expense ratio of 10 basis points versus 40 for GLD, with IAU in between at 25 basis points. “GLDM is the cheaper vehicle if you’re buying and holding while GLD is the better instrument if you want liquidity and options,” he said.
The iShares Silver Trust (SLV) offers a more volatile route into precious metals, according to Young, while GDX and GDXJ offer operating leverage and equity risk beyond the underlying metal’s price swings.
That leverage cuts both ways, according to Young: when gold prices climb while mining costs hold steady, profit margins can expand much faster than the metal itself moves, which is why miner-focused funds tend to swing harder than bullion in either direction.
“GDX did roughly three times gold’s move last week … and the juniors are more violent still,” Kennedy said. “For most individual investors miners belong as a satellite position, not a core one,” he added.
Stock Chart IconStock chart iconVan Eck Gold Miners ETF five-year performance.
Cavatoni says more volatility in the price of gold could be ahead, with the upcoming Federal Reserve meeting in Jackson Hole, Wyoming, and broader policy developments helping to determine whether the rally continues.
New Fed Chair Kevin Warsh, who is communicating in a new way with the market, is a major factor. “The new Fed chairman has altered the market landscape,” said Eugenia Mykuliak, founder & executive director at B2Prime Group, a brokerage platform for trading in assets including precious metals. What Mykuliak described as “cautious and often ambiguous statements” from Warsh — including at his first Fed meeting — hit stocks hard, and a side effect of this change in Fed leadership was that gold started to climb. When the market is unsure of the central bank’s policy, money moves from stocks to safer instruments like gold and other metals.
Kennedy agreed that uncertainty about the Fed could be bullish for gold. “You have a Fed Chair signaling higher for longer into a labor market that is visibly softening. That’s a stagflation setup, and gold tends to do well when the market starts questioning whether the Fed can hit both sides of its mandate,” he said.
“Gold more than doubled between late 2023 and the January record, positioning got extended, and it needed to work that off,” Kennedy said. It remains his view that nothing in the longer-term secular case for gold broke. “If anything the drivers accelerated. Brent is near %90 with the Strait of Hormuz still closed and Iran holding conditions on reopening it, which keeps the forward inflation risk alive even with the July print cooling,” he added.
Inflation will continue to loom large in that picture, she said, and if the market outlook remains on the side of price growth being modest, there is additional runway for gold. “It could even climb higher than the January highs,” Mykuliak said.
Continued buying in China and India, which remain the centers of physical gold demand, will add support to prices. Looking at the trading chart year-to-date, “the prices are at comparative lows with the potential to grow higher,” Mykuliak said.
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