Article Quarterly Gold Insights: A review of gold in Q3 2026 and outlook for the rest of the year

Gold’s performance in Q3 2026

Following a weak Q2 performance, the gold price spent much of July bouncing around the psychologically relevant $4,000 level. Central banks purchased 23 tonnes of gold in the month, while additional support was provided in the latter half of the month by a pick-up in demand for gold ETPs. Investment strengthened over the rest of the quarter.

July’s consolidation was followed by a much more positive August. The gold price rallied on a series of softer US economic data, with a weaker jobs report followed by CPI and PPI numbers that were below market expectations. Although neither is the Fed’s preferred gauge for inflation, they nonetheless reduced the market’s Fed rate hike expectations. Gold was also supported by further central bank buying, including the second-straight month the People’s Bank of China reported purchasing 20 tonnes.  

The gold price declined in September, however, when bond yields rose sharply, but gold eventually finished Q3 at $4,157 an ounce for a quarterly gain of 3.7%. The fact that gold managed a gain in a quarter when bond yields reached multi-decade highs is noteworthy. The historical relationship between gold and real yields has been much weaker since 2022, when the freezing of Russian reserves pushed central banks to buy gold regardless of price. Higher bond yields, especially in real terms, increases the opportunity cost of holding the non-yielding asset. 

What impacted gold? Bond yields, inflation and interest rates

Bond yields had arguably the biggest impact on the gold price in the quarter. The global sell-off of fixed income assets sent US Treasury yields sharply higher across the curve and with longer maturities hitting multi-decade highs in September. Yields on 10-year and 30-year US Treasuries reached their highest closing levels since 2002, ending Q3 at 5.28% and 5.63% respectively. 

The bond sell-off has been driven by several factors, including the possibility that the Fed keeps interest rates higher for longer with inflation persistently above its 2% target. More recently, we’ve seen growth taking over as a key driver of higher yields. Real yields are up, while term premia as shown in Figure 2 are broadly flattening.

Competing supply is also impacting demand for government bonds, with new corporate debt to finance AI infrastructure projects being favoured by many long-term investors. There could also be an element of bond investors’ demanding more compensation from Treasuries for what might be considered increasing risk from factors including the US national debt surpassing $40 trillion in the quarter.

Inflation is driving much of the sentiment around interest rate policy. The Fed raised rates by 25 basis points in September to a target range of 3.75-4.00%, a unanimous decision among committee members, and the dot plot signalled at least one hike in Q4 2026. However, following the surprisingly weak personal consumption expenditures (PCE) index on the final day of the quarter, the probability of a rate hike in October was cut to 40% from 68% a week earlier, as shown by the CME FedWatch tool. 

While inflation is still elevated, in our view this reading could give Fed members reason to leave rates unchanged at the October meeting, waiting for more data ahead of a more likely rate increase in December, assuming inflation hasn’t come down by then and the economy is still strengthening. Q2 GDP was revised significantly higher.

Global investors return to gold ETPs in Q3

High gold prices and strong equity markets have probably limited the attraction of including gold in diversified portfolios. The amount of gold held in physical gold-backed ETFs and other exchange-traded products (ETPs) globally had decreased for most of 2026, but this trend reversed sharply in Q3, and the period ended with more being held in these products globally than at any time for the past 12 months. 

The outlook for gold

If financial markets remain volatile, we wouldn’t be surprised to see volatility in the gold price, possibly even regardless of the outlook. As we’ve observed in previous market stress events, some investors are forced to use whatever liquid assets they own, including gold, to meet margin calls or cover losses elsewhere, rather than necessarily wanting to sell the asset because their views have changed. This may be particularly relevant for investors whose gold positions have appreciated in value over recent years.

That said we think structural support for gold remains in place. We believe central banks will continue buying gold to diversify their reserves. Central banks are largely price-insensitive and, as referenced in last quarter’s Gold Insights article, state that among the leading drivers of those ongoing gold purchases are concern over global volatility, inflation protection, and geopolitical uncertainty. According to the World Gold Council, central banks purchased more gold in Q2 2026 than in any second quarter on record.

Central banks are paying close attention to where their gold is held, not just how much they own. In September, De Nederlandsche Bank (DNB) said it had moved around 86 tonnes of gold to London from New York and Ottawa between March and August, citing increasing geopolitical unrest and the need to be better prepared for a crisis. London’s share of the Netherlands’ gold reserves rose from 18.1% to 32.1%, while New York’s fell from 31.3% to 18.5%. DNB’s reasoning was practical: gold held at the Bank of England meets international trading standards and can be accessed more quickly if needed.

The move follows the Banque de France’s replacement of 129 tonnes held in New York with bullion bought in Europe between July 2025 and January 2026. Neither move changed the total amount of gold held, so neither adds to demand directly. But both suggest reserve managers increasingly see gold as an asset they may need to use in a crisis, not just one to hold. That supports the case for continued central bank buying.

What would make us rethink the gold outlook?

Starting with the downside risks, prospects could deteriorate if we see further strengthening in the US Dollar or a slowdown in central bank buying. On the other hand, gold could benefit from a growth scare that brings rate cuts back into view, renewed fiscal or debasement concerns, or a geopolitical shock. 

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Frequently Asked Questions

Why do interest rate changes impact gold?

Gold does not pay an income, so higher interest rates can make cash and bonds more attractive by comparison. Lower rates reduce that opportunity cost, which can support demand for gold.

Why does the US Dollar impact gold?

Gold is priced globally in US dollars, so a stronger dollar usually makes it more expensive for non-US buyers and can weigh on demand. Conversely, a weaker dollar can make gold more affordable internationally and help support prices.

Why does inflation impact gold?

Gold is often viewed as a hedge against inflation because its supply is limited and it is not tied to any single currency. However, inflation’s impact depends heavily on real interest rates: if rates rise faster than inflation, gold can face pressure.

Why is gold considered a “store of value”?

Gold is considered a store of value because it is scarce, durable, widely accepted and cannot be printed like fiat currency. These qualities have helped it preserve purchasing power over long periods, especially during economic or currency stress.

What is the World Gold Council?

The World Gold Council is the gold industry’s market development organisation, representing major gold mining companies and promoting understanding of gold’s role in markets and society. It publishes research, data and guidance on gold demand, investment, central banks and responsible supply chains.

What is a physical gold ETC?

A physical gold exchange-traded commodity (ETC) is a security designed to track the gold price, typically backed by allocated physical bullion held with a custodian. It gives investors exposure to gold without needing to store or insure bars or coins themselves.

What role does gold play in a portfolio?

Gold can act as a diversifier because its drivers often differ from equities and bonds, particularly during periods of market stress, inflation concern or geopolitical uncertainty. It can also provide liquidity and a potential hedge, though it does not generate income and can be volatile.