Gold prices may be nearing bottom as World Gold Council sees recovery signals

The World Gold Council (WGC) suggests gold prices may be nearing an interim bottom, with two of three historical conditions for recovery already in place, according to its latest report. Despite a recent correction, the macroeconomic and fundamental backdrop remains stronger than during the post-2011 downturn. "Our simple framework suggests gold may be nearing an interim bottom: two of three conditions are in place.

More importantly, unlike in 2011, the macro backdrop supports a recovery," the report states. Gold closed at USD 3,913 per ounce in October, down 6.3 percent, with prices falling across major currencies. The WGC identifies technical dislocation and dollar strength as signals that recent sell-off may be nearing exhaustion, but notes speculative positioning has yet to fully unwind.

Historical analysis of gold bear markets since 2005 indicates two or more of the three conditions present generated a median three-month forward return of 4.2 percent, with positive returns in 90 percent of observations. However, the council warns a further reduction in speculative futures positions would be needed before a more durable recovery could take hold.

The current market environment differs from post-2011 conditions, with real yields in restrictive territory, an expensive US dollar, and elevated geopolitical risks, making this correction less likely to be prolonged. Technical indicators show gold trading around 10 percent below its 200-day moving average, with potential support at USD 3,857 per ounce.

The council advises investors to consider the outlook for equity and credit markets, as well as policy decisions surrounding US midterm elections, as key factors influencing gold prices during the remainder of 2026.