According to the World Bank’s April Commodity Market Outlook, gold and silver prices are expected to remain elevated in 2026, but their upside potential may be capped near current levels.

Although war and geopolitical uncertainty continue to inject volatility into the commodity market, World Bank analysts believe the rally in precious metals is showing signs of slowing after an exceptionally strong start to the year.

In the first quarter, gold prices rose by around 17% compared with the fourth quarter of the previous year. Silver posted an even stronger gain, jumping 55% in the first three months of the year. Overall, the precious metals price index increased by 84% compared with the same period last year.

World Bank forecasts gold to average $4,700/oz in 2026

In its updated forecast, the World Bank expects gold prices to average around $4,700 per ounce in 2026, up 37% from the previous year. However, the institution projects gold prices to decline by around 7% in 2027.

Silver is expected to follow a similar path. The World Bank forecasts silver prices to average around $70 per ounce in 2026, up 76% from the previous year, before falling by around 7% in 2027.

This suggests that the World Bank does not dismiss the strength of this year’s upward trend, but it expects the market to struggle to maintain the same pace of rapid gains seen earlier in the year.

Why could gold and silver face a “price ceiling”?

One of the key reasons behind the World Bank’s cautious view is inflationary pressure from energy prices. As oil, natural gas, and other input costs rise sharply, inflation expectations may increase, raising the possibility that interest rates remain higher for longer.

This creates a headwind for gold and silver, as both are non-interest-bearing assets. When interest rates rise, the opportunity cost of holding precious metals increases.

In addition, if geopolitical tensions ease, safe-haven demand could weaken. The World Bank also noted that if central banks slow their gold purchases after several years of strong accumulation, an important source of support for gold prices could fade.

Silver faces additional risk from industrial demand

Compared with gold, silver has a stronger industrial component. Therefore, if economic uncertainty leads to slower global growth, industrial demand for silver could be affected.

The World Bank warned that silver may be more vulnerable if the speculative surge seen since early 2025 reverses. Profit-taking and portfolio rebalancing could trigger sharper-than-expected corrections.

Risks remain tilted to the upside

Despite its cautious stance, the World Bank said risks to the precious metals outlook remain tilted to the upside. If global trade tensions return, financial markets become more volatile, or geopolitical risks continue to escalate, safe-haven inflows into gold and silver could strengthen again.

In that scenario, precious metals prices could move above current projections.

The global commodity backdrop has changed significantly

Beyond gold and silver, the World Bank noted that the war involving Iran has significantly reshaped the outlook for global commodities. In its October report, the institution had forecast a 7% decline in commodity prices. It now expects average commodity prices to rise by 16%, marking the first annual increase since 2022.

Energy remains the dominant force. Oil and natural gas prices have surged due to supply shortages, leading the World Bank to forecast a 24% increase in average energy prices in 2026. At the same time, fertilizer, food, base metal, and precious metal prices are all facing upward pressure from higher production costs and export disruptions.

Conclusion

The World Bank’s report shows that gold and silver remain supported by geopolitical uncertainty, financial market volatility, and safe-haven demand. However, after a sharp rally, the upside momentum in both metals may slow as the market faces pressure from interest rates, profit-taking risks, and shifts in speculative flows.

In the short term, gold and silver are still likely to play an important role amid heightened volatility across global commodity markets. However, investors should be more cautious with chasing long positions, especially as prices may have already reflected much of the positive outlook.

Source: Kitco