–
AWAITED
February review
Gold gained 5% in February on dip buying, dollar weakness and softer US Treasury yields.
Looking forward
Medium-term downtrend in the US dollar is likely to resume – post some near-term respite – and provide further support for gold prices.
Login or register to read the text, view charts and download the files..
Registration is free, quick and easy. It gives you access to all downloads on this website.
Gold gained another 5% in February to reach US$5,222/oz; it is now up 20% y-t-d. Performance in other currencies, however, was mixed: a sharp Indian rupee appreciation following tariff relief with the US, saw local prices drop 3.5%; likewise, a surge in the renminbi saw local prices fall.
Our Gold Return Attribution Model (GRAM) suggests that contributions to the positive return came from a weaker US dollar, particularly against EM currencies (Chart 1). A lower 10-year US Treasury yield also helped. But the model missed the positive return with a large positive residual. A sharp drop in implied volatility following the surge in January could have dragged gold down further in the first half of the month, but it was likely held up by strong Asian buying – evidenced both by gold returns during Asian trading hours and high volumes on the Shanghai Futures exchange. This is not explicitly captured in our model.
Gold ETFs added US$5.3bn to assets in February (+26t), led by North America and Asia, with Europe seeing outflows of US$1.8bn (-13t). Managed money net long positions on COMEX contracted sharply in early February, before picking up a little steam towards the end of the month.
Sources: Bloomberg, World Gold Council; Disclaimer
*Data to 27 February 2026. Our Gold Return Attribution Model (GRAM) is a multiple regression model of monthly gold price returns, which we group into four key thematic driver categories of gold’s performance: economic expansion, risk & uncertainty, opportunity cost, and momentum. These themes capture motives behind gold demand; most importantly, investment demand, which is considered the marginal driver of gold price returns in the short run. The ‘residual’ represents the percentage change in the gold price that is not explained by factors already included. Results shown here are based on analysis covering a five-year estimation period using monthly data. Alternative estimation periods and data frequencies are available on Goldhub.com.
*As of 27 February 2026. Based on the LBMA Gold Price PM in USD, expressed in local currencies, except for India and China where the MCX Gold Price PM and Shanghai Gold Benchmark PM are used, respectively.
Source: Bloomberg, World Gold Council
The downward trend in the US dollar index (DXY) is likely to resume post this near-term bounce and is, in our view, a key positive force for gold prices going forward.
The DXY avoided a technical downside breakdown in January, helped by positive economic surprises and supportive futures positioning (Chart 2). But we view this as a temporary respite. The case for medium-term dollar weakness rests on these factors:
US dollar index (DXY) and relative US economic surprises*
Sources: Bloomberg, World Gold Council; Disclaimer
*Data to 27 February 2026. Relative economic surprises calculated as US economic surprise index less the average of Eurozone and Japan surprises.
Both on a Real Effective Exchange Rate (REER) basis and price to sales – a number that is a little harder to adjust than earnings – the US remains expensive (Chart 3).
US dollar (REER) and US Price-to-Sales differential*
Sources: Bloomberg, World Gold Council; Disclaimer
*Data to 27 February 2026. Real Effective Exchange Rate (REER) on CITI narrow trade-weighted US dollar index. Price-to-sales differential shows US less the average of Eurozone and Japan.
Foreign investors have been facing a choice: hedge US exposure (and accept lower returns) or rotate elsewhere (Chart 4). There are tentative signs that this is happening and the rationale is quite strong: fiscal headroom in Germany, better valuations, reform momentum in Japan, and political and concentration risks in the US.
Equity returns for EU investors in the US and at home*
Sources: Bloomberg, World Gold Council; Disclaimer
*Data from January 2021 to February 2026. Home = MSCI Europe total return in EUR, Unhedged = MSCI USA TR in EUR. Hedged index is MSCI USA TR hedged in EUR. Results are equivalent for Japan.
To boot, European and Japanese markets are considerably smaller than the US so shifts could move markets meaningfully, reinforcing the trend.
Should these outflows continue, they could amplify the trajectory of a weaker currency and poorer prospective returns. Previous major US dollar bear markets experienced large initial drops, possibly a function of this vicious circle (Chart 5), which coincided with equity underperformance.
So far, however, this marginal rotation is focused more on equities than bonds, with US Treasuries still attracting inflows. With interest rate differentials arguing that the dollar is fairly valued, equity flows may become more important in dictating where the dollar goes from here.
US dollar (DXY) index and US relative equity performance*
Sources: Bloomberg, World Gold Council; Disclaimer
*Data from January 1970 to February 2026.
Dollar weakness, high policy and geopolitical uncertainty, and more volatile capital flows are conditions that favour gold. And continued central bank diversification into gold provides further support.
But there are risks for gold too:
The Middle East conflict that erupted at the end of February saw an immediate and unsurprising reaction from asset prices on Monday 2 March. Oil prices climbed, the dollar rallied, and yields softened somewhat. Gold also bounced, up almost 5% across two trading sessions. Historically it has responded positively in about two-thirds of instances in which geopolitical tension has spiked significantly. But the next two weeks are less certain, with gold showing a broader range of returns (+8% to -3%) and a hit rate that falls to 57%.
Bottom line: the dollar bounce – boosted by the current conflict – is likely short-lived, and a resumption in the downtrend should be supportive for gold.
Disclaimer [+]
Important information and disclaimers
© 2026 World Gold Council. All rights reserved. World Gold Council and the Circle device are trademarks of the World Gold Council or its affiliates.
All references to LBMA Gold Price are used with the permission of ICE Benchmark Administration Limited and have been provided for informational purposes only. ICE Benchmark Administration Limited accepts no liability or responsibility for the accuracy of the prices or the underlying product to which the prices may be referenced. Other content is the intellectual property of the respective third party and all rights are reserved to them.
Reproduction or redistribution of any of this information is expressly prohibited without the prior written consent of World Gold Council or the appropriate copyright owners, except as specifically provided below. Information and statistics are copyright © and/or other intellectual property of the World Gold Council or its affiliates or third-party providers identified herein. All rights of the respective owners are reserved.
The use of the statistics in this information is permitted for the purposes of review and commentary (including media commentary) in line with fair industry practice, subject to the following two pre-conditions: (i) only limited extracts of data or analysis be used; and (ii) any and all use of these statistics is accompanied by a citation to World Gold Council and, where appropriate, to Metals Focus or other identified copyright owners as their source. World Gold Council is affiliated with Metals Focus.
The World Gold Council and its affiliates do not guarantee the accuracy or completeness of any information nor accept responsibility for any losses or damages arising directly or indirectly from the use of this information.
This information is for educational purposes only and by receiving this information, you agree with its intended purpose. Nothing contained herein is intended to constitute a recommendation, investment advice, or offer for the purchase or sale of gold, any gold-related products or services or any other products, services, securities or financial instruments (collectively, “Services”). This information does not take into account any investment objectives, financial situation or particular needs of any particular person.
Diversification does not guarantee any investment returns and does not eliminate the risk of loss. Past performance is not necessarily indicative of future results. The resulting performance of any investment outcomes that can be generated through allocation to gold are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. The World Gold Council and its affiliates do not guarantee or warranty any calculations and models used in any hypothetical portfolios or any outcomes resulting from any such use. Investors should discuss their individual circumstances with their appropriate investment professionals before making any decision regarding any Services or investments.
This information may contain forward-looking statements, such as statements which use the words “believes”, “expects”, “may”, or “suggests”, or similar terminology, which are based on current expectations and are subject to change. Forward-looking statements involve a number of risks and uncertainties. There can be no assurance that any forward-looking statements will be achieved. World Gold Council and its affiliates assume no responsibility for updating any forward-looking statements.
Information regarding QaurumSM and the Gold Valuation Framework
Note that the resulting performance of various investment outcomes that can be generated through use of Qaurum, the Gold Valuation Framework and other information are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. Neither World Gold Council (including its affiliates) nor Oxford Economics provides any warranty or guarantee regarding the functionality of the tool, including without limitation any projections, estimates or calculations.
Helping you stay informed about the gold industry’s latest news and updates.
We value your opinion, we would like to hear from professional investors like yourself.
We value your opinion – The World Gold Council would like to contact professional investors like yourself to participate in focus groups, surveys and share your feedback on the World Gold Council website experience.
使用微信扫一扫登录
[世界黄金协会]
