The first half of 2026 has been difficult for precious metals, in fact towards the end of June all precious metals were showing YTD losses.
Platinum and palladium are posting the largest losses mostly due to uptake in EV vehicle use which do not use these metals, however, both still remain in a supply deficit. Silver has also seen losses this year, which is difficult to understand with such high demand especially in the data centre space.
The precious metal I want to focus on today is gold. The dollar gold price peaked at the end of January at just over $5,350, since then it has massively come back, reaching its lowest price of the year in June at just below $4,000. Some have been calling this the end of the gold rally, however, there are still reasons to be excited about gold bullion and gold miners.
JPM release gold price forecasts, as do many other investment firms, but JPM are one of the most followed prices so I’m using theirs as an example. In February, the end of year price they had for gold was $6,300 but they have pulled this back to $6,000 as at the beginning of June and see a stronger 2027 with gold pushing on to nearly $6,300.
Gold ETF flows have marginally come down in 2026, suggesting some investors had been taking profits. This isn’t particularly newsworthy since gold ETFs haven’t actually seen big inflows in the last 5 years, in fact ETF outflows have been the norm with the exclusion of 2025 which saw good inflows.
However, central banks have continued to buy more and more gold. In 2025 technically central banks bought less gold by weight compared to the three-years prior, but it was the most they had spent on gold with the increased price. Estimates roughly are at $95bn spent in 2025 vs $84bn in 2024. 2026 has been good for central banks gold buying, the falling price has meant opportunity. China is one of the largest buyers of gold in recent years and 2026 has been no different; in Q1 Chinese imported 314 tons of gold, which was up three times compared to Q4 2025. The trend continued in Q2 with 163 tons imported in May. YTD gold imports to China are up over 75% year-on-year.
China isn’t the only central bank buying; the World Gold Council central bank survey found that 45% of the respondents expect their central bank to increase gold reserves over the next 12 months. Only 1% of respondents indicated a reduction in gold holdings. The rest expected no change. This highlights the structural change currently happening, DM deficits are coming to the forefront and now are coming with more risk attached and de-dollarisation is a long-term trend which isn’t going away anytime soon. DM deficits are coming to the forefront and now are coming with more risk attached.
Now for the interesting bit: gold miners. I’ve used the VanEck Gold Miner ETF as the reference for the following numbers. The gold miners index has massively come down this year, the GDX ETF reached its peak on the 27th January at 140, and has dropped to lows in June of around 80. YTD the index is only down around 6% (as of 3rd July). However, the miners were never trading at large valuations anyway, meaning they are still cheap vs history, representing a good opportunity.
I read an article from a gold and silver fund manager who highlighted that the gold miners which they track are trading a lower net asset value than in 2018 despite having significantly increasing profitability. Price/NAV is at 0.7x, compared to 1.5x in 2018, and free cash flow margin up from 15% in 2018 to 52% at the end of May 2026.
Just last year, Ray Dalio, billionaire and founder of Bridgewater Associates, told investors that portfolio allocations to gold should be around 10-15% of portfolios going forward. There have been similar statements made in recent months highlighting the importance of a precious metal allocation going forward.
Most investors gold allocation comes from gold bullion, however, there are arguments for a growing allocation to gold miners. With gold bullion and gold equities now trading at attractive prices again, there is a good opportunity to increase total gold allocations.
Emily Cave – Research Analyst
FPC26726
All charts and data sourced from FactSet
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