LONDON — Gold and silver prices retreated sharply from the record highs reached during the first half of 2026, as investors reassessed expectations for U.S. monetary policy, a stronger dollar and easing geopolitical risk after a rally that had driven both precious metals to historic peaks earlier in the year.
Gold surged to successive all-time highs in January, supported by safe-haven demand amid geopolitical tensions, persistent central bank purchases and concerns over inflation and fiscal risks. Silver also climbed to record levels, buoyed by both investment demand and expectations for industrial consumption.
The rally, however, lost momentum during the second quarter. Gold recorded its first quarterly decline since 2024 and its steepest quarterly fall in more than a decade, while silver also retreated as investors shifted toward U.S. dollar-denominated assets following stronger Treasury yields and growing expectations that the Federal Reserve could keep monetary policy tighter for longer.
Analysts said the change in interest-rate expectations reduced the appeal of non-yielding assets such as bullion.
"The weakness is driven by expectations that higher interest rates may be needed," UBS analyst Giovanni Staunovo said in comments reported by Reuters, noting that markets had increased pricing for additional Federal Reserve tightening.
The stronger dollar also weighed on demand by making gold and silver more expensive for buyers using other currencies, while some easing in geopolitical tensions reduced immediate demand for traditional safe-haven assets.
Despite the correction, industry analysts said longer-term support for gold has not disappeared. The World Gold Council said in its mid-year outlook that bullion remained among the best-performing major assets over the past year even after falling from its January peak, with future performance likely to depend on geopolitical developments, central bank purchases and the path of global interest rates.
Physical demand showed mixed trends across major Asian markets. Buying in India weakened after prices rebounded from recent lows, while Chinese demand improved modestly as local premiums narrowed, according to market participants.
By early July, gold was trading near multi-month lows after slipping below the psychologically important $4,000-per-ounce level during the previous week before stabilizing, while silver also remained well below the record levels reached earlier in 2026. Market participants said upcoming U.S. economic data and Federal Reserve communications would remain key drivers for precious-metals prices in the weeks ahead.
