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Informist, Thursday, Apr. 30, 2026

MUMBAI – Amid high volatility in global gold prices in recent weeks, the World Bank expects the yellow metal to rise 36% in 2026 but come down 8.5% next year, it said in the April edition of its bi-annual Commodity Market Outlook.

The US-Iran war represents a historic shock to commodity markets, the report said and added that markets have turned extremely volatile. After presenting a blistering rally in early 2026, gold prices subsided as the conflict in the West Asian region escalated. "This atypical pattern--precious metal returns often increase as geopolitical stress emerges--likely reflects a partial reversal of the speculative fervour that gripped precious metals markets in recent months, extending a spell of extraordinary volatility," the report noted.

"Average base metals prices are projected to reach an all-time high, as are prices of precious metals, amid extraordinary volatility," the report said.

At this stage of the geopolitical situation, commodity price forecasts need carefully structured assumptions. The report points out its assumptions: "The baseline commodity projections are premised on the most acute phase of supply disruptions related to war in the Middle East ending in May. Thereafter, shipping volumes through the Strait of Hormuz are assumed to haltingly recover, stabilizing around pre-war levels by the final quarter of the year. The envisaged shocks to energy, fertilizers, and other commodities therefore mainly reflect dislocations—global production capacity is sufficient but access is temporarily impeded—rather than more fundamental mismatches between consumption and supply capacity."

Following the base scenario, the World Bank report has projected gold prices to to average $4,700 per ounce in 2026, up 37% from 2025. It sees the 2027 average price at $4,300 per ounce, down 8.5% on year.

The report has pointed out that these projections remain subject to uncertainty. "Given the sensitivity of precious metals prices to shifts in global risk sentiment, speculative demand, and macroeconomic conditions, the outlook remains subject to considerable uncertainty. On balance, risks to the baseline forecast for these prices remain tilted to the upside".

Elaborating on the risks to the projections, the report said: "A resurgence of global trade tensions or financial market volatility could trigger additional safe-haven inflows into gold and silver, pushing prices above current projections. Meanwhile, prolonged conflict-related challenges in the Middle East or increased geopolitical tensions elsewhere, could reinforce investor demand, particularly for gold. And if recent patterns of heightened speculative activity in precious metals markets continue, the price effects of shocks could be amplified, causing outsized swings in prices."

But there are downward risks too. "Downside risks include a tightening of monetary policy in major economies in response to renewed inflationary pressures, raising interest rates beyond baseline assumptions. This would tend to increase the opportunity cost of holding precious metals, which are non-interest-bearing assets. A sustained easing of geopolitical tensions could also soften safe-haven flows, while a steeper slowdown in central bank purchases—after several years of exceptionally strong accumulation—could remove another important source of price support."

At 1346 IST, the June futures contract for gold on COMEX traded at $4,630.9, up 1.5% from the previous close. The same month contract on MCX was trading at INR 151,448, up 1.6%.  End

US$1 = INR 95.13

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Abhijit Doshi

Edited by Akul Nishant Akhoury

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