Gold’s dramatic surge at the beginning of 2026 has created an overextended market in the short term, according to Barclays. Spot gold experienced a rapid increase from approximately $US4300 at the close of the previous year to nearly $US5600 within a matter of weeks. The market has since eased back to around $US4950. Barclays describes this movement as highly volatile, noting that current market positioning is stretched and technical indicators are overheated.
Barclays anticipates a near-term correction and a ‘positioning reset’ following the rapid price appreciation. However, the bank suggests that demand for gold is likely to resurface at lower price points, providing ongoing support for the precious metal. The bank’s analysis indicates that underlying factors continue to favour elevated prices, even after the anticipated pullback.
While Barclays estimates gold’s fair value to be around $US4000, the bank argues that a sustained premium above this level is not uncommon. It points out that at $US4400, the metal would still be within one standard deviation of its fair value. Historical cycles demonstrate that such misalignments can persist for extended periods.
Furthermore, Barclays notes that ongoing inflation is contributing to the upward adjustment of gold’s fair value. Central bank purchasing activity remains robust, reinforcing the structural demand for gold and providing additional support to prices.
