LBMA Precious Metals Market Report: Q2 2026

It was the best of times – the gold price hit an all-time high of $5,501.70 (a.m.) on 29 January 2026. It was the worst of times – in the ensuing five months, the price fell nearly 27%, to close June at $4,026.05 (p.m.), and had dipped below $4,000, for the first time since early November 2025, only the week before ($3,994.50 on 25 June a.m.).

Broadly speaking, analysts, commentators and the media explained these moves via a focus on geopolitical disruption – most recently the US-Israel-Iran War which kicked off at the end of February. However, it is also arguable that an initial failure to correctly interpret the economic consequences of that war was key to the price reversal.

While it has proved historically true that conflict encourages the gold market as investors seek for the world’s longest- and best-established safe haven, the Iran War introduced another price driver, and one which it took a little time to interpret: the spectre of inflation. Which, in this case, was prompted by oil.

Many investors and traders, primarily in the developed world, at first viewed the Iran War as simply another chapter in the long saga of Middle East strife. But this thinking did not take account of the 104-mile waterway between the Persian Guild and the Gulf of Oman – the Strait of Hormuz – which, in normal times, is the passageway for some 25% of seaborne oil, equivalent to some 20% of global oil consumption.

The Strait of Hormuz

So, as the conflict closed the Strait to commercial traffic, and as ceasefire attempts were (and continue to be at the time of writing) only partially successful, the price of oil rose rapidly. Brent Crude, for example, which was trading around the $60 per barrel mark at the beginning of the year, reached $102 at the start of April and recorded $114.5 (i.e. +91%) on 4 May – its highpoint of the first half of the year. And, as the price of oil – thus energy – went up, so too did fears of inflation, and economists began to talk in terms of the US Federal Reserve, under the leadership of the newly appointed Kevin Warsh, holding or, indeed, hiking interest rates in response.  

And finally, as has been frequently demonstrated, inflation tends to be the enemy of the gold price, given there is a received idea (which does not bear detailed examination) that gold does not generate interest, and thus as the returns generated from more obvious assets – US Treasuries, for example – rise, so enthusiasm for holding gold declines.

All of the above created a ‘Through the Looking Glass’ market where, as the intensity of the Iran War increased, the gold price (and silver price) fell, and as negotiations towards a ceasefire took place, the price tended to rise.

Given these circumstances, it should be a fair question to ask why the price of gold did not decline further in Q2. After all, looking over the medium-term, say back to the beginning of last year, gold had gained over 50% in the 18 months to end June ($2,644.60 a.m. 2 Jan 2025, to $4,026.05 p.m. 30 Jun 2026), which is more than can be said for, say, the S&P 500 which was up some 28% during the same period despite being described by Yahoo Finance as being on “quite a tear” (driven by AI).

Central Banks, Commercial Banks

Among the key reasons advanced for this underpinning of the gold price was continued central bank buying. In May, for example, the People’s Bank of China added 320,000oz (~10t) to its reserve base – becoming a net buyer for the nineteenth month in succession, its longest streak since 2015. More broadly, the World Gold Council reported that central banks led by Poland had been net buyers of 41t gold in May, with the only net sellers being Russia and Turkey (which in April had been reported as a seller – or lender – of some $20bn in gold in the five weeks since the outbreak of the Iran War).

Unsurprisingly, the volatility in the gold price during Q2 led to a series of revisions to price forecasts through the remainder of the year and beyond. In mid-April State Street was still looking for a price above $5,000 by year end, but by the end of June Goldman Sachs was talking in terms of $4,900 to as low as $4,400.

Perhaps the most interesting price comment (the bank was at pains to stress this was not a formal forecast) came from Deutsche Bank at the end of April (quoted by Mining.com), who suggested a price of $8,000 was plausible in about five years, given continuing central bank buying associated with dedollarisation. Deutsche Bank was reported to have said that global central bank gold holdings could realistically account for some 40% of overall reserves (up from 30% today).

A further central bank story appeared in mid-June in the Financial Times which quoted a WGC report saying that, led by France and India, central banks had been actively repatriating gold in response to ‘global insecurity’ . France, apparently, now stores all its gold domestically, while India had moved most of its gold from vaults of the Bank of England and the Bank for International Settlements, to the extent that by March 2026 only 22% of its gold holdings were abroad (down from 55% three years earlier).

That said, the LBMA London vault figures for June 2026 recorded 9,464 tonnes of gold (a 0.77% increase on May) valued at $1.2 trillion, and 28,082 tonnes of silver (a 1.7% increase on the previous month). There was no clear sign of large repatriation movements of either metal.

Asia

Retail buying of gold remained volatile in the quarter as investors took advantage of falling prices. This prompted the governments of India and Malaysia to impose import tariffs (15% and 10% respectively) to apply a brake on imports, which appears to have happened although clear numbers are thus far unavailable (Indian imports of silver are, however, reported to be the lowest for three years).

Significant market moves were also announced during the quarter by the governments of both Singapore and Hong Kong, each of which is working to set up a new regional gold hub.

And finally, The Independent (11 May) quoted President Trump as keen to check the contents of Fort Knox because, in his words, “they steal a lot”.