Gold: a volatile path towards a new base. WisdomTree’s forecasts through to the first quarter of 2027

Record rallies, brutal corrections, geopolitical shocks, new structural buyers and a constantly evolving macroeconomic landscape: all this has made the first quarter of the year an extraordinary test for analysts, investors and forecasting models. WisdomTree has published its updated outlook on gold, looking ahead to the first quarter of 2027, and the picture that emerges is one of a metal in transition towards a higher equilibrium level, but with volatility set to remain high as it approaches that level.

A textbook quarter: all-time highs and a record correction

On 30 January 2026, the price of gold touched nearly $5,600 per ounce on an intraday basis, the highest level ever recorded. That same month saw the largest monthly rise since September 1999. Yet, by 2 February, prices had already fallen to $4,402 per ounce, wiping out the entire January gain in just a few days. In March, the monthly loss was the sharpest since June 2013, with the metal having fallen to around $4,100 per ounce by 23 March, in negative territory since the start of the year.

Within a week, however, gold recovered, rising above $4,600 per ounce.

Data from the World Gold Council confirms the scale of this volatility: in the first quarter of 2026, the average LBMA price (PM) reached a record $4,873 per ounce, in a quarter that delivered a total return of 6%. The value of quarterly demand rose by 74% year-on-year to $193 billion, also a record.

The drivers of volatility: geopolitics and ‘amplifying factors’

Nitesh Shah of WisdomTree accurately identifies the causes of the extreme volatility in the first quarter. On the positive side, the regime change in Venezuela in early January, renewed discussions about the US acquisition of Greenland and political pressure on the independence of the Federal Reserve supported the precious metal. But the scale of the initial move, according to WisdomTree, was excessive relative to fundamentals.

The reason lies in a structural phenomenon increasingly characterising the gold market: the broadening of the buyer base has created “amplifiers” of price reactions. Many of these new buyers are in China and India, where demand has been particularly strong. When sentiment reverses, the very forces that amplified the rally accelerate the correction.

On the counterbalancing front, the nomination of Kevin Warsh as a candidate for the Fed chairmanship has eased fears of political interference in monetary policy. Seasonal dynamics have played a role: following the massive purchases ahead of the Lunar New Year, Asian demand has slowed. And central bank purchases have undergone a natural cooling-off following the surge in prices.

The “fall first, then rise” pattern: geopolitics is never linear

One of the most analytically significant points in the WisdomTree document concerns gold’s reaction to geopolitical shocks. Historical analysis shows that the precious metal often records an initial negative reaction, before recovering and rising. This pattern has been observed in widely spaced events such as 11 September 2001, the dot-com bubble, Black Monday in 1987 and the war between Russia and Ukraine.

The mechanism is consistent: geopolitical shocks trigger sharp falls in risk assets, generate margin calls, and investors sell gold — a highly liquid asset — to meet their obligations. The downward pressure is temporary. Once the forced-selling dynamics subside, the geopolitical risk premium once again becomes the driving factor.

This pattern was repeated in February 2026 with the outbreak of the conflict between the US/Israel and Iran. The event occurred at a time when gold was already undergoing a correction, amplifying the negative effect in the short term. WisdomTree also points out that, in the affected regions — particularly in the Middle East — households have sold physical gold to finance urgent expenses such as travel and relocation. This type of sale should not be interpreted as a loss of confidence in the metal: it is the use of gold as a source of liquidity in times of tension, which confirms its role as a reserve asset.

As of today, 11 May 2026, the price of gold stands at around $4,720 per ounce, up 2% for the week, buoyed by reports of progress in negotiations for a potential peace deal between the United States and Iran, following weeks in which the conflict had dragged the metal down by more than 10% from its highs at the start of the year.

The Federal Reserve and uncertainty over governance

WisdomTree devotes considerable attention to the issue of central bank independence, identified as one of the structural factors supporting gold. The appointment of Kevin Warsh at the end of January 2026 alleviated the most acute concerns, following President Trump’s repeated attacks on the Fed and fears linked to the entry into the Board of Governors of figures such as Stephen Miran (who joined in September 2025).

The recent closure of the Department of Justice’s criminal investigation into current Chair Powell has smoothed the path for Warsh’s confirmation. Senator Thom Tillis has indicated that he will no longer block the appointment. Barring any unforeseen developments, Warsh will in all likelihood be Chair of the Fed when the FOMC meets on 17 June.

However, uncertainty remains regarding Powell’s position as a governor and the possibility that President Trump may appoint a further member to the board. On the legal front, the disputes over the removal of Governor Lisa Cook have been temporarily blocked by lower courts, but the Supreme Court — whose ruling is expected by the middle of the year — has yet to issue a final judgement.

The federal budget and the bond market: a persistent risk

Fiscal dynamics remain a cause for concern. The Supreme Court’s ruling against the use of the IEEPA for tariffs on 20 February 2026 has reduced expected revenues. Taking into account tax cuts, the expansion of public spending and increased military expenditure, the US deficit is set to widen. Recent Treasury auctions showed weaker demand at the end of March, which returned in April at higher yields, with investors demanding a premium to absorb the growing supply.

WisdomTree believes this environment keeps gold well supported: the historically inverse relationship between gold and bond yields continues to weaken. A structurally limited supply of gold, against a backdrop of rising forward premium demand, provides underlying technical support.

The new structural buyers: Tether, Chinese insurers, Indian pension funds

One of the most innovative aspects of WisdomTree’s analysis concerns the new players that have broadened the base of demand for gold. In addition to central bank purchases — which the World Gold Council estimates at 244 tonnes in the first quarter of 2026 alone — relatively new buyers are emerging.

Tether, the issuer of the USDT stablecoin, purchased between 60 and 70 tonnes of gold during 2025, according to WisdomTree’s estimates based on quarterly certification reports and the LBMA price. This places it alongside major public-sector buyers such as Kazakhstan, Azerbaijan’s SOFAZ, Brazil and Turkey. The table of quarterly estimates shows a gradual acceleration: from 8–12 tonnes in the first quarter of 2025 to 27 tonnes in the fourth quarter of 2025.

An important methodological point: IFS statistics tend to underestimate central bank purchases. China, for example, reported only 27 tonnes in 2025, a figure likely to be lower than the actual volume. WisdomTree estimates that actual central bank purchases could be three to four times higher than the official figures.

On the non-institutional demand front, World Gold Council data for the first quarter of 2026 show bar and coin purchases at 474 tonnes (+42%), the second-highest quarterly figure ever recorded. Asian investors — led by Chinese and Indian buyers — drove this growth. Inflows into gold ETFs reached an additional 62 tonnes during the quarter.

The case of Turkey: gold as crisis collateral

WisdomTree also analyses Turkey’s actions, which sold — and partly swapped — between 58 and 60 tonnes of gold in two weeks to prop up the lira and secure dollar liquidity. The analysis is clear: this type of action does not weaken gold’s role as a reserve asset; it strengthens it. Central banks turn to gold in times of crisis not to reject it, but to utilise its liquidity.

The precedent from 2023, when Turkey sold gold following the earthquake and then replenished its reserves in the months that followed, suggests that a similar pattern may emerge in this cycle as well.

The limitations of forecasting models: a rare admission

WisdomTree is taking a rare step in the financial research industry: publicly acknowledging the limitations of its proprietary model. The model is calibrated to the period 1995–2023, a relatively calm era for the precious metal. A traditional indicator such as net speculative positioning in COMEX futures now appears underweight relative to the geopolitical context, likely because it reflects only the Western and US components of global demand.

The inclusion of other markets — the Shanghai Futures Exchange, OTC markets, ETP flows — would reduce the length of the available historical dataset, limiting the ability to model across multiple economic cycles. The inclusion of a geopolitical risk index, such as that of Caldara and Iacoviello (2022), improves the model’s relevance but introduces issues of stationarity and the unpredictability of events.

WisdomTree’s operational decision is to retain the existing model with discretionary adjustments to speculative positioning assumptions, and to move away from quarterly forecasts in favour of a one-year horizon. The forecasts that follow should therefore be read as the lower bound of a plausible range, with potential for further upside arising from the structural expansion of the investor base.

Forecasts for the first quarter of 2027: three scenarios

Consensus scenario: $5,493 per ounce

The baseline macro assumptions — inflation at 2.8%, 10-year nominal yields at 4.13%, DXY at 96.3 and net speculative positioning at 200,000 contracts — lead to an expected price of $5,493 per ounce in the first quarter of 2027. This would exceed the previous all-time high on a closing basis, given that the intraday peak of nearly $5,600 on 30 January 2026 was maintained for only a very brief period. The main drivers in this scenario are improved sentiment and persistently high inflation.

Inflationary pressures remain fuelled by the conflict in Iran, the expansion of public sector balance sheets in the US and Europe, and supply chain disruptions linked to tariffs. The dollar is expected to depreciate gradually — returning to January 2026 levels, if not sooner — as a result of the widening twin deficits.

Bullish scenario: $5,872 per ounce

With inflation at 4%, 10-year yields at 5%, the DXY at 90 and net speculative positioning at 250,000 contracts, the expected price rises to $5,872 per ounce. This scenario assumes a persistent energy crisis, a more pronounced depreciation of the dollar, and a Federal Reserve that — to avoid exacerbating the recession or due to political pressure — refrains from further tightening monetary conditions despite high inflation. In this context, sentiment towards gold strengthens significantly as a hedge against the depreciation of fiat currencies.

Bearish scenario: $4,634 per ounce

In the most pessimistic scenario, the Fed manages to bring inflation back down to 2%, but at the cost of weaker economic growth. Higher interest rates cause the dollar to appreciate significantly (DXY at 108), 10-year yields fall to 3.5% and speculative positioning plummets to 50,000 contracts. Gold returns to around $4,634 per ounce, essentially at early 2026 levels. WisdomTree considers this the least likely scenario, but not one that can be ruled out: a central bank seeking to assert its independence could adopt a more restrictive stance than is currently priced in by the markets.

A comparison with market estimates

WisdomTree’s forecasts come against a backdrop of broad bullish consensus among major global financial institutions. JP Morgan expects prices to reach around $5,000 per ounce by the fourth quarter of 2026, with $6,000 a possibility in the medium term. Deutsche Bank has reiterated a target of $6,000 per ounce. Société Générale forecasts the same level by the end of 2026. Wells Fargo has raised its year-end target to a range of $6,100 to $6,300 per ounce, revising its previous estimate of $4,500–$4,700.

Demand from ETFs: a still underutilised driver

The World Gold Council reports that in 2026, global gold ETFs accumulated $77 billion in inflows, adding over 700 tonnes to their holdings. Even taking May 2024 as a reference point, gold ETFs increased their holdings by around 850 tonnes. This figure is less than half of what was observed in previous gold bull cycles, suggesting ample scope for further growth in the ETF segment.

Concluding remarks

WisdomTree’s analysis describes a gold market undergoing a structural transition. The entry of new buyers — Chinese insurers, Indian pension funds, digital asset issuers, and central banks from emerging markets — has broadened the demand base, likely permanently, creating the conditions for a higher price equilibrium than in the recent past.

The path to getting there is, and will remain, volatile. The combination of persistent geopolitical risk (the US-Iran conflict, tensions in the Strait of Hormuz, US mid-term elections), uncertainty over the Federal Reserve’s governance, structural fiscal pressures and complex currency dynamics keeps the risk premium embedded in the price of gold at historically high levels.

For long-term investors, periods of sharp correction — such as that of February–March 2026 — represent opportunities, not signs of a structural reversal. WisdomTree states this explicitly: the consensus forecast of $5,493 is the floor of a plausible range, not the ceiling.