Lower Rates Sustain Demand for Non-Yielding Assets

The FOMC meeting in December was clear: even though there were some internal disagreements, most of the Fed’s policymakers still think there’s room for further easing if inflation continues to slow. The upshot is lower interest rates, which make holding non-yielding assets like gold much less costly, keeping demand for them afloat.

Geopolitical Risks and Market Caution Shape Near-Term Outlook

The ongoing conflicts and tensions between nations have added a big layer of uncertainty to the mix, which in turn has led investors to stick with the tried and true safe haven assets that always seem to do well during times of uncertainty – and gold is no exception.

The big question is: will its price hold at record levels despite the inevitable pullbacks? That said, we do face some near-term headwinds.

The first is that after a gain as sharp as gold’s, some people will want to cash in their profits, which could lead to selling pressure. The CME Group has also decided to up the margin requirements for gold and other metals, which is likely to make it a little more expensive to speculate on the price of gold, and that could also dampen demand.

Looking ahead, gold is likely to remain well-supported as long as rate-cut expectations and geopolitical tensions continue to simmer. However, with US markets set to release a batch of important data, including the final Manufacturing PMI, traders are likely to keep a close eye on how it all plays out, especially its impact on the dollar and the Fed’s next move.

Short-Term Forecast

Gold may consolidate between $4,350–$4,450 in the near term, with dips attracting buyers above $4,300, while a break above $4,400 could reopen the path toward $4,475.

NEW YORK, January 1, 2026, 15:17 ET

• Haynes Boone’s lender survey cut the base-case 2026 U.S. gas price deck to $3.43/mmBtu, down from $3.54 in spring.
• EIA projects Henry Hub averaging $4.01/mmBtu in 2026; a Dallas Fed survey of executives put year-end 2026 at $4.19/mmBtu.
• LNG export growth and large-load power demand are emerging as key swing factors for 2026 pricing.

Banks that lend to the U.S. oil and gas industry trimmed their 2026 natural gas price deck to $3.43 per million British thermal units (mmBtu), a standard unit of heat energy, down from $3.54 in the spring, a Haynes Boone survey of 29 lenders showed. The survey also lowered the 2026 oil assumption to $55.44 a barrel and put a downside gas case at $2.79/mmBtu. MRT

Those assumptions feed directly into borrowing bases and spending plans at producers as they lock in hedges and set drilling budgets for 2026. Even small shifts in the price deck can change how much cash operators expect to generate.

They also matter for consumers because Henry Hub — a Louisiana pricing hub — is the benchmark for most U.S. wholesale gas contracts and a key input for many power markets. The central question in the 2026 natural gas price forecast is whether supply growth can keep up with rising liquefied natural gas (LNG) exports, gas cooled into a liquid for shipping, and electricity demand.

The U.S. Energy Information Administration projected Henry Hub spot gas would average $4.01/mmBtu in 2026, up from a projected $3.56/mmBtu in 2025, in its latest Short-Term Energy Outlook. It forecast dry gas production averaging 109.11 billion cubic feet per day (bcfd) in 2026 and LNG exports rising to 16.3 bcfd. U.S. Energy Information Administration

Energy executives in the Federal Reserve Bank of Dallas’ latest Energy Survey pegged Henry Hub at $4.19/mmBtu by the end of 2026 and put West Texas Intermediate crude around $62 a barrel for the same period. Henry Hub averaged $4.84/mmBtu during the survey collection period, the Dallas Fed said. Federal Reserve Bank of Dallas

U.S. natural gas futures dropped more than 5% on Dec. 31, with February futures around $3.745/mmBtu midday, after weather forecasts turned warmer and federal data showed a 38 billion cubic feet (bcf) storage withdrawal for the week ended Dec. 26, below market expectations. LSEG estimated lower-48 output averaged 110.1 bcfd in December and LNG feedgas about 18.5 bcfd, both records. “We’re about to hit the next wave of the LNG boom,” said Robert DiDona, president of Energy Ventures Analysis. BOE Report

Heating degree days, or HDDs, measure how much heating demand households and businesses face; milder weather usually means fewer HDDs and weaker gas burn. Storage withdrawals matter because they show whether inventories are tightening fast enough to support prices later in winter.

Analysts have increasingly argued that 2026 price moves will be driven less by daily weather swings and more by LNG demand, as new export projects compete for supply, Argus said. The U.S. has about 17.5 bcfd of liquefaction capacity operating and 15 bcfd under construction, and meeting new projects could require roughly 9.9–10.8 bcfd of additional feedgas once processing losses are included, it said. Argus Media

Data-center power demand is another lever that traders are building into 2026 expectations, especially in the U.S. East, where pipeline takeaway has historically constrained regional pricing, Argus said. Range Resources expects 2.5 bcfd of incremental U.S. demand from data centers by the end of the decade and cited a 4 bcfd increase in U.S. LNG export capacity coming online in 2026. Argus Media

Put together, the forecasts sketch a market that is firmer than 2025 but still sensitive to timing. If export ramps and new power loads slip, the lender decks may prove closer to the mark; if they arrive on schedule while production growth stays modest, the higher forecasts get tested quickly.

Globally, the LNG build-out carries its own risk: a Reuters commodities columnist wrote that LNG may come under pressure in 2026 as more U.S. plants are commissioned and the market looks for prices low enough to clear the extra supply. Reuters

For now, the 2026 natural gas price forecast is converging on a mid-$3 to low-$4 Henry Hub range, with winter inventories and the pace of LNG commissioning as the main near-term signposts. Regional basis markets — the premium or discount to Henry Hub — are likely to stay volatile as infrastructure and demand growth play out unevenly.

• Brent ended 2025 at $60.85 a barrel after a roughly 19% annual drop; U.S. WTI settled at $57.42, down nearly 20%.
• BNP Paribas expects Brent to dip to $55 in the first quarter of 2026 before rebounding toward $60, with demand flat and supply still growing.
• Forecasters see a 2026 surplus ranging from the IEA’s 3.84 million barrels per day to Goldman Sachs’ 2 million bpd, keeping pressure on prices.

Brent crude is expected to slide toward $55 a barrel in early 2026 as analysts warn that supply will outpace demand after oil posted its steepest annual fall since 2020.

The forecast matters as governments and central banks start the year watching energy costs for inflation, while producers weigh drilling plans and hedging strategies for 2026.

Traders are also looking to OPEC+ for direction ahead of a January 4 meeting, with the group’s next policy move seen as pivotal if prices drift into the low $50s.

Brent futures settled at $60.85 a barrel on Dec. 31, while U.S. West Texas Intermediate (WTI) ended at $57.42. Brent fell about 19% in 2025 and WTI nearly 20%, extending a multi-year losing streak for benchmarks.

BNP Paribas commodities analyst Jason Ying expects Brent to dip to $55 in the first quarter before recovering to $60 for the rest of 2026. “We think U.S. shale producers were able to hedge at high levels,” Ying said, referring to using derivatives to lock in future selling prices and keep production steady even if spot prices fall. Reuters

Morgan Stanley’s global oil strategist Martijn Rats said OPEC+ would likely respond with cuts only if prices fall substantially further, pointing to the low $50s as the area that could force the group’s hand, according to Reuters.

Most analysts expect a 2026 surplus, with estimates ranging from the International Energy Agency’s 3.84 million barrels per day to Goldman Sachs’ 2 million bpd. A surplus means the world is pumping more oil each day than it consumes, swelling inventories and weighing on prices.

OPEC+, which groups the Organization of the Petroleum Exporting Countries and allies including Russia, paused output hikes for the first quarter of 2026 after releasing about 2.9 million bpd into the market since April, Reuters reported.

U.S. data have also reinforced the market’s focus on demand. The Energy Information Administration said crude stockpiles fell by 1.9 million barrels in the week ended Dec. 26, while gasoline rose by 5.8 million barrels and distillates, including diesel and heating oil, climbed by 5 million barrels on strong refining runs. ( Reuters)

In the same report, “total product supplied” — a widely watched proxy for demand — dropped by 934,000 bpd to 19.38 million bpd, a decline that can signal softer consumption as the holiday period fades.

Geopolitics remains the wild card, analysts said, even with the market leaning bearish on fundamentals. The United States imposed new sanctions on four companies it said were operating in Venezuela’s oil sector and targeted associated tankers, a move Washington said was part of an intensified pressure campaign on President Nicolas Maduro. ( Reuters)

The U.S. action followed a broader push against what officials call a “shadow fleet” — older ships with opaque ownership and limited insurance that transport sanctioned oil — and came after a U.S. blockade announced earlier in December that Reuters said helped cut Venezuela’s exports to about half of November levels.

For now, the tug-of-war is clear: surging supply expectations and swelling inventories point lower, while OPEC+ policy and sanctions-driven disruptions could keep a floor under prices.

The next test comes quickly. Traders will watch the Jan. 4 OPEC+ meeting and early-2026 demand signals for clues on whether Brent stabilizes near $60 — or slips toward the mid-$50s that some banks have penciled in.

NEW YORK, January 1, 2026, 13:00 ET — Market closed

• U.S. natural gas-linked fund UNG fell 6.7% in the last session as Henry Hub futures dropped on warmer forecasts and a light storage draw.
• Gas producers slipped while LNG exporter Cheniere edged up, with traders focused on weather updates and the next EIA storage report.

The United States Natural Gas Fund (UNG) sank 6.7% on Wednesday, the last U.S. trading session of 2025, tracking a sharp pullback in U.S. natural gas prices after traders leaned into a warmer weather outlook for early January.

The move matters because winter pricing is still dominated by short-term swings in heating demand, and forecasts can change quickly. A warmer-than-normal pattern typically means less gas burned for heat and fewer withdrawals from storage.

It also lands as U.S. liquefied natural gas (LNG) exports keep running at high levels, tying domestic prices more closely to export demand. That support can be offset in the near term when weather turns milder and production stays high.

UNG closed at $12.26, after trading between $12.18 and $12.69 during the session.

Among gas-heavy producers, EQT fell 1.9%, Antero Resources slid 1.8% and Range Resources dropped 2.3%. LNG exporter Cheniere Energy rose 0.5%.

In the futures market, front-month February Henry Hub contracts were down 5.7% at $3.745 per million British thermal units by 12:41 p.m. ET on Wednesday, pressured by warmer forecasts for next week and a smaller-than-expected storage withdrawal, even as record gas flows to LNG export facilities in 2025 kept the market on track for a second straight annual gain. BOE Report

Meteorologists projected above-normal temperatures across the country through Jan. 14, Reuters reported, and Heating Degree Days — a measure of energy demand to heat buildings — fell to 413 from 439 a day earlier. BOE Report

The Energy Information Administration said utilities withdrew 38 billion cubic feet (bcf) from storage for the week ended Dec. 26. One bcf is a billion cubic feet of gas. BOE Report+1

Working gas in storage stood at 3,375 bcf, the EIA data showed. That left inventories about 58 bcf above the five-year average for this time of year, based on the agency’s historical comparisons. EIA Information Releases

On the supply side, LSEG data showed Lower 48 output averaging 110.1 billion cubic feet per day (bcfd) in December, a record, while average feedgas deliveries to the eight big U.S. LNG export plants reached 18.5 bcfd in December. Feedgas is gas delivered to liquefaction terminals for export. BOE Report

“Given this weather and the drawdown number, there’s really not a whole lot of room for the natural gas prices to go up,” said Zhen Zhu, a managing consultant at C.H. Guernsey and Company in Oklahoma City. BOE Report

Before the next session: U.S. markets reopen on Jan. 2, and traders are likely to keep treating weather model shifts and LNG feedgas flows as the main near-term catalysts. The next weekly storage report from the EIA is scheduled for Jan. 8, following Wednesday’s holiday-shifted release. EIA Information Releases+2EIA Information Releases+2

UNG’s Wednesday low of $12.18 is the first level many short-term traders will watch for signs of another wave of selling, while the day’s high of $12.69 marks the nearby upside hurdle if gas prices rebound.

Safe-haven demand remains a significant long-term tailwind for gold and, of course, there’s lots more going on beyond the Fed’s policy moves that’s keeping gold in demand as a safe-haven asset. The global security situation remains tense, which is keeping people flocking to gold when they get nervous, even as markets are a bit thin and people take profits at the end of the year.

Central Bank Buying Anchors the Long-Term Trend

Central Bank Buying has helped keep the longer-term trend going strong and underpinning the whole gold price rally is the fact that central banks have kept buying gold & that the gold-backed ETFs are still holding pretty strong. All this steady demand has really helped absorb any volatility that’s come up and keep prices supported above some key long-term averages.

When the markets finally get back to work after the New Year break, you can bet that traders will be focusing hard on Fed guidance, real interest rates, and geopolitics to see if gold can finally make a move above where it is now or if it just goes sideways for a bit before deciding which way to go next.

Short-Term Forecast

Gold holds near $4,310 after the Dec 31 close. On reopening, a break above $4,360 targets $4,400–$4,450, while a slip below $4,280 risks $4,255 support.

Gold Prices Forecast: Technical Analysis