World Gold Council Warns of Potential 37 Percent Gold Price Drop

The World Gold Council reports that gold prices may face a significant correction, potentially sliding 37 percent from their January high to a support level of USD 3,500 per ounce if prices break below USD 3,857 per ounce. Gold was trading around USD 4,063.80 per ounce at the time of the report, following a 1 percent weekly decline in the London Bullion Market Association Gold Price PM to USD 4,027 per ounce.

Market volatility is driven by shifting U.S. Federal Reserve interest rate expectations and the U.S.-Iran conflict. Jefferies Group notes that gold has already declined approximately 25 percent from peak levels due to rising real rates and weaker central bank demand in early 2026. Market outlooks have shifted from projected rate cuts to expectations of one to two rate hikes, increasing the opportunity cost of holding gold.

Potential supports for the metal include a stronger Japanese yen, resulting from coordinated U.S.-Japan currency interventions, and a weaker U.S. dollar. Jefferies suggests a resolution to the U.S.-Iran war could reverse current tighter policy biases. This aligns with an announcement by Donald Trump regarding fresh negotiations to ease tensions between the U.S. and Iran. Other factors influencing the market include upcoming U.S. payroll data, manufacturing and services PMIs, and ongoing de-dollarization trends.