Gold likely to trade in narrow range in H2 as higher US yields weigh on prices

Vijay Valecha, Thu, July 23, 2026 Khaleej Times

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.

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.

“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.

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.

Khaleej Times