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Gold likely to trade in narrow range in H2 as higher US yields weigh on prices
If current market conditions persist, gold is expected to trade within a narrow range for the remainder of the year, with any significant upside depending on a shift in monetary policy expectations.
- PUBLISHED: Thu 23 Jul 2026, 6:00 AM
Gold is not expected to make all-time highs in the second half of 2026 as higher US interest rates, elevated Treasury yields, and a stronger dollar continue to pressure the precious metal, despite ongoing geopolitical tensions supporting safe-haven demand, analysts say.
If current market conditions persist, gold is expected to trade within a narrow range for the remainder of the year, with any significant upside depending on a shift in monetary policy expectations or signs of slowing economic growth, according to the analysts.
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Vijay Valecha, chief investment officer at Century Financial, said stronger-than-expected US economic growth and persistent inflation have prompted investors to expect a more restrictive Federal Reserve, weighing on gold prices. He expects the precious metal to remain largely range-bound around current levels for the rest of the year.
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“If any major catalyst emerges, like a reversal in monetary policy expectations or a slowdown in economic growth, then gold could see a trend reversal to the upside,” the CIO explained. “Until then, it is expected to oscillate within a range.”
Gold tends to have an inverse relationship with the US dollar, meaning a stronger greenback typically weighs on bullion prices, he said. Higher Treasury yields also reduce the appeal of non-yielding assets such as gold by increasing the opportunity cost of holding the metal, Valecha added.
Geopolitical tensions no longer enough
Although geopolitical tensions continue to support demand for gold, some say the current conflict in the region has created a different dynamic compared with previous crises.
Ole Hansen, head of commodity strategy at Saxo Bank, said rising oil prices have pushed inflation expectations higher, strengthening the US dollar and keeping bond yields elevated, which has offset much of gold's traditional safe-haven appeal.
Instead, Hansen expects gold to trade within a broad range of $3,900 to $4,200 an ounce until there is greater clarity on inflation and interest rates.
“A sustained break above $4,500 would probably be needed to attract a fresh wave of investment demand, as many investors currently remain on the sidelines waiting for greater clarity on the Middle East, inflation and the interest-rate outlook,” he said.
“Until the outlook for funding costs begin to stabilize or move lower from current rate-hike territory, non-yielding assets such as gold are likely to face periodic headwinds, Hansen added.
Long-term outlook remains positive
Despite the near-term headwinds, analysts remain optimistic about gold's longer-term prospects.
Awad Issawi, Mena regional spokesperson and market analyst at iFOREX, said continued central bank buying, elevated government debt and demand for portfolio diversification continue to support the precious metal.
However, he noted that fresh record highs would likely require a combination of easing monetary policy, persistent inflation and continued geopolitical uncertainty, rather than a single catalyst.
In the UAE, higher prices are also changing buying behaviour. Valecha said consumers are increasingly opting for lighter-weight jewellery or purchasing bars and coins as a long-term investment, while investors continue to view gold as an important portfolio diversifier.
Hind Aldah is a business reporter based in Sharjah. In her spare time, you will find her playing classical guitar, painting amateur oil paintings, or crocheting the same old scarf that leads nowhere.