Gold has experienced significant fluctuations over the past year, reaching a high of US$5,500 per ounce in January 2026, before settling around US$4,100. This price remains elevated compared to historical levels, particularly since gold first surpassed the US$2,000 mark in 2020.
Several factors contribute to gold's price movement, with recent months heavily influenced by shifting expectations regarding interest rates. Fund managers note that inflation forecasts and geopolitical tensions, notably the Iran war, have prompted changes in predictions about the monetary policy direction of central banks, including the U.S. Federal Reserve.
Edward Dashwood, a portfolio manager and partner at Letko Brosseau & Associates, remarked on the speculative narrative surrounding anticipated interest rate cuts, which had fueled excitement in the gold market. However, he pointed out a drastic reversal in interest rate expectations over the last six months, which is now exerting pressure on gold prices.
At its June meeting, the U.S. Fed indicated through projections that it expects the federal funds rate to increase later this year and into the next, diverging from prior forecasts. This meeting was particularly notable as it marked Kevin Warsh's first gathering as Fed chairman, leading the market to adopt a more hawkish stance on interest rates.
As borrowing costs increase, gold becomes less attractive to investors, who may prefer assets that yield interest. Dashwood noted that the rising rate expectations are overshadowing gold’s traditional appeal as a safe-haven asset, which typically shines during economic or geopolitical turmoil.
Historically, during times of crisis, such as the trade disputes following U.S. President Donald Trump’s return to office or conflicts in the Middle East, gold has served as a refuge for investors. However, current scenarios are witnessing rising rate expectations taking precedence over this protective role.
After hitting a peak price, gold has experienced a correction, dropping to levels akin to those witnessed in November 2025. While prices may have retracted from their peaks, they remain elevated compared to previous years. Dashwood expressed that should inflation driven by the U.S.-Iran conflict prove temporary and central banks decide to stimulate the economy through rate cuts, gold could benefit from renewed interest.
Sam Baldwin, senior portfolio manager at Guardian Capital LP, stated that gold is currently undergoing a "cooling-off period." He observed that prices are in the "beginnings of a correction", although they do not appear to have reached distressed levels. Baldwin expressed uncertainty regarding the prospective direction of gold prices, suggesting that the risk-reward scenario is currently balanced.
Dennis da Silva, a senior portfolio manager at Middlefield, highlighted that central banks have significantly increased their gold purchases in the past four years following Russia's invasion of Ukraine, as they seek to diversify their foreign reserves away from the U.S. dollar. He emphasized that fundamental demand remains robust, supporting gold's price stability and preventing it from returning to levels seen three or four years prior.
Da Silva indicated that momentum would play a critical role in the future trajectory of gold prices. He suggested that if gold breaks through the US$3,700 per ounce mark, a further decline to around US$3,400 could follow. Conversely, he believes that a sustainable recovery above US$4,300 would pave the way for a move back towards the US$5,000 level within the next twelve months.
In Canada, where the benchmark stock index has a notably high concentration of gold mining companies, Dashwood remarked that fluctuations in commodity prices typically affect these companies simultaneously. He added that companies with quality assets tend to weather commodity cycles better and can generate sustained value over time.
This report highlights the dynamic nature of gold investment, shaped by macroeconomic factors and market sentiment. With ongoing geopolitical events and evolving monetary policy, gold remains a focal point for investors navigating uncertainty in the financial landscape.
