Gold Set For a Strong Rally as New Financial Year Begins

Precious metals ended a record FY25/26 on a soft footing, with the USD gold price falling by close to 15% between March and June, its worst quarterly performance in more than a decade. 

This price fall—which began at the end of January—was caused by a strengthening U.S. dollar, a sharp rise in bond yields, a complete 180 from the market as it relates to interest rate expectations (with rate hikes in the United States now priced in), liquidity needs caused by the U.S.-Iran war, and a washout of the extreme bullishness and speculation that had crept into the gold and silver market earlier this year. 

There was also a huge surge in the stock market between March and early June (the S&P 500 was up over 20% during this period) as euphoria took over any tech- or AI-related trades. In the short-term at least, this diminished the safe-haven appeal of precious metals. 

While the pullback has been painful for some, it was certainly not unexpected—and was in many ways necessary, as long-term bull markets in any asset classes do require periodic consolidations. 

Importantly, the pullback has likely done its worst in terms of performance and price falls. It has also totally reset sentiment in the precious metal market, with euphoria replaced by fear and/or apathy—typically the kind of market conditions that reward buyers.  

It is also worth pointing out that despite the sell-off over the past five months, both gold and silver ended the financial year delivering strong gains for Australian investors, with the AUD gold price rising by 16%, while silver was up by over 50%. 

Take a longer-term view and the results are even more impressive, with the gold price up by more than 100% since June 2023. Silver has rallied by close to 150% over the same period, with the two precious metals strongly outperforming traditional assets over this period. 

The strong rally over the past three years has been driven by multiple factors, including: 

• Strong Central Bank Buying: Central banks bought 3,000 tonnes of gold between 2003 and 2025, with a further 243 tonnes of buying in Q1 2026. Surveys of central bankers suggest holdings will continue to grow, with gold set to play a more important role as a reserve asset in the decade ahead. 

• ETF Inflows in 2025: ETF holders were substantial net sellers between 2021 and 2024, with net sales each year and a total of 544 tonnes coming out of these products in that period. The tide turned from late 2024 onward, with almost 1,000 tonnes of inflows seen in the last 18 months. 

• Surge in Demand for Retail Bars and Coins: Global bar and coin demand was 42% higher year-on-year in Q1 2026, while buying from this segment of the market topped 1,400 tonnes in 2025 (up 16% on 2024). A longer-term view is even more eye-opening, with gold bar and coin buying from 2023-2025 inclusive topping 3,800 tonnes (more than 30% of all mine output in that period). That level of buying is 13% higher than we saw in the three-year window from 2020-2022 inclusive, a period that included the Covid-19 pandemic. 

Source: World Gold Council Q1 2026 Gold Demand Trends  

When you factor in dollar-based spending on bars and coins—with gold prices substantially higher in the 2023-2026 window vs the 2020-2023 window—the result is even more impressive.  

Outlook For 2026/27 Financial Year 

ABC Bullion remains optimistic on the outlook for bullion this year, with the huge pullback that we have seen in the last five months setting a base from which the long-term bull market can resume. 

The challenges posed by overvaluation assets remain unresolved, with the S&P 500 starting this new financial year trading above 40-times cyclically adjusted earnings. Inflation remains at problematic levels, with no easy way to use interest rates to bring it down, given the debt and deficit levels seen across the developed world, headlined by the United States, which will soon clock over USD $40 trillion in debt.  

I can personally remember when that number was closer to USD $10 trillion when the Global Financial Crisis hit.  

Heightened geopolitical conflict will be with us for the foreseeable future, creating permanent uncertainty as it relates to energy security and the potential for commodity price shocks. 

Last but not least, Western investors remain very lightly exposed to genuine safe-haven assets that can help protect their portfolio and provide a source of growth during otherwise challenging periods. 

Government bonds—which are likely to be a source of return-free risk, rather than risk-free return—will likely continue to drag on investor portfolios, with physical gold the only asset that has the market size, the liquidity and the risk/return profile to fill that gap. 

With a textbook correction now played out, sentiment readings that have historically been followed by an average 16% gain in the year that followed, and a 100% win-rate (data thanks to Sentiment Trader), now is a great time to be looking to add more bullion to a portfolio.   

Until next time.

Jordan Eliseo
General Manager, ABC Bullion

Luke Tyler
Senior Analyst, ABC Bullion

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