In 2026, gold finds itself at the intersection of geopolitical developments, inflation, interest rate trends, central bank gold purchases, and the sharp increase in India's import tax from 6 to 15 percent in May of this year. Using its Gold Evaluation Framework and drawing on quarterly data from the beginning of 2000 through the end of 2025, the World Gold Council calculated in a recent study the effects of small changes in the key drivers of the gold price. The results should be seen only as directional approximations of actual gold price movements, since all calculations are to be understood on a ceteris paribus basis — meaning the change in one variable is observed under the condition that all other variables remain constant — a scenario that rarely occurs in reality. Still, the study's findings are certainly of interest to investors.
Central banks: a dual role in gold price developments
On one hand, central banks act as major buyers of gold, having accounted for more than 20 percent of total demand for years. According to the study, every 20–30 tons of additional gold demand is estimated to correspond to a one percent increase in the global gold price. On the other hand, central banks' interest rate policy also plays a major role in shaping interest rate levels: according to the study, every 25-basis-point cut in 10-year US Treasury yields could mean a 1.75 percent increase in the gold price.
India's tax policy: impact possibly greater than expected
A 100-point increase in the GPR Index, which measures geopolitical risk, could trigger a 2.5 percent increase in the gold price, according to the study. A one percent rise in inflation is estimated to result in a 0.5 percent increase in the gold price. In addition, a 10 percent increase in India's import tax would mean a 2 percent gain in the gold price. That is how significant an impact a shift in tax policy could have – considered in isolation – in one of the countries with the strongest gold demand.