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Gold prices tumbled sharply on Friday, extending weekly losses and casting doubt on the World Bank’s bullish outlook for precious metals this year, even as the institution’s core long-term arguments remain intact.
Spot gold fell 2.2% to $4,546.45 per ounce by 1000 GMT, its lowest level since May 5, putting the metal on track for a 3.6% weekly decline. U.S. gold futures for June delivery dropped even more steeply, losing 2.9% to $4,550.80. The sell-off came as the World Bank, in its late-April commodities report, raised its 2026 forecast for precious metals to a collective 42% gain from 2025 averages, creating a stark contrast between short-term weakness and long-term optimism.
The sharp decline was driven by a confluence of negative factors. Benchmark 10-year U.S. Treasury yields climbed to a near one-year high, increasing the opportunity cost of holding non-yielding gold. The U.S. dollar also strengthened, making dollar-denominated bullion more expensive for overseas buyers.
Paradoxically, tensions in the Middle East—traditionally a bullish catalyst for gold—have become a key headwind. The near-closure of the Strait of Hormuz pushed Brent crude prices 7.8% higher this week to above $109 a barrel. This surge in energy prices has amplified inflation concerns, which were further confirmed by April’s PPI and CPI data released this week. As a result, traders have completely priced out any U.S. interest rate cuts for 2026, according to CME’s FedWatch Tool.
Adding to the pressure, India’s decision this week to sharply raise gold import duties sent domestic gold discounts to record highs, further dampening global demand. The sell-off was broad-based across the precious metals complex: spot silver plummeted 7.2%, platinum lost 2.9%, and palladium fell 1.4%, with all three set for weekly losses.
Despite the recent rout, the World Bank’s upgraded forecast is based on four durable long-term factors that continue to support a positive outlook for precious metals.
First, escalating geopolitical tensions in the Middle East, where the conflict in Iran has disrupted nearly 20% of global oil shipments through the Strait of Hormuz, are expected to sustain safe-haven demand. Second, the energy price shock—with Brent crude nearly doubling from $61 to $118 per barrel in the first quarter—has pushed the World Bank to raise its inflation forecast for emerging market and developing economies to 5.1%, reinforcing gold’s traditional role as an inflation hedge.
Third, the combination of geopolitical instability and rising inflation is creating significant market volatility and policy uncertainty, which typically benefits safe-haven assets. Finally, slowing global growth and rising stagflation risks remain a concern: U.S. GDP grew just 0.7% in the fourth quarter of 2025 and only recovered to 2% in the first quarter of 2026, well below ideal levels.
Notably, gold, silver and platinum already exceeded the World Bank’s earlier expectations in the first quarter, hitting record highs of $5,400, $116 and $2,770 per ounce respectively. The World Bank projects precious metals will outperform nearly all other commodity categories in 2026, with silver leading the gains followed by platinum.
“Longer term, the mood is constructive towards higher prices, but arguably in the short term gold is unreadable as uncertainty grips the newswires,” said independent analyst Ross Norman. Most industry experts remain bullish on the long-term outlook, with consensus 2026 gold price forecasts still above $6,000 per ounce, aligning with the World Bank’s revised projections.
