Falling global interest rates push gold higher, but prices may correct 10-15% in early 2026: GJC founder member

By Kaushal Verma

New Delhi, [India] December 25 : Gold prices have witnessed a sharp surge amid declining global interest rates and heightened geopolitical uncertainties, though a correction of 10-15 per cent is likely in early 2026 as markets normalise after the holiday season and risks begin to ease, said Anantha Padmanaban, founder member and former chairman of the All India Gem & Jewellery Domestic Council (GJC), in an interview with ANI.

"Prices are continuously going up because the interest rates are going down across the world," Padmanaban told ANI.

He pointed out that major central banks are moving towards monetary easing, adding, "Yesterday even the Bank of England has lowered interest rates, and next month again it will also come in the US. All this is happening, and a lot of geopolitical situations are driving gold prices higher."

According to him, domestic gold prices are currently hovering around ₹1,40,000 per 10 grams. However, low trading volumes during the Christmas period have led to volatile price movements. "It's Christmas and market participants are very low, so prices are fluctuating erratically," he said, adding that clarity would emerge only once full participation resumes. "We have to see from January 3 or 4 onwards, once the full players come in, how the gold price behaves."

Padmanaban expects a near-term pullback. "Anything that goes up has to come down a little bit," he said. "For the next two months, prices may correct."

Geopolitical developments could also influence prices in the coming months. "Russia and Ukraine are serious about settling down. There are peace talks happening," he said. He also referred to trade discussions, noting, "Between India and the US, tariff talks are going on. If these two subjects get settled and there are no major issues, prices may correct for some time."

On the extent of a potential correction in gold prices, Padmanaban said, "We can see a 10 to 15% correction, that's all, nothing more than that. The window would be in the first three months. Till April, I don't think it goes beyond this."

He stressed that currency movements will be critical for domestic prices. "If there is a settlement between the US and India, the rupee will strengthen," he said. "Even if gold prices and the dollar don't come down, the rupee can appreciate by 4-5%. That itself will make a big difference."

India's dependence on imports further amplifies the impact of exchange rates. "We don't have mining in our country. Every gram is imported," Padmanaban said. "Whenever the rupee depreciates, gold prices go up."

High prices have significantly dampened retail demand. "Last 15 days, after the price rise and rupee depreciation, sales have come down below 50%," he said, adding that festive and NRI-led demand has remained muted. "In spite of Christmas and New Year holidays and NRIs coming in, there is not much reaction."

He noted that consumers are largely exchanging old jewellery, with fresh buying limited. "New purchases are happening only if there is a marriage," he said.

Imports have also declined sharply. "In November, imports came down by more than 60%," Padmanaban said. "This month, it will also be the same. For the full financial year, imports may fall between 25 and 40%."

A price correction could revive demand, particularly during the wedding season. "Even a 10-15% fall will attract new buyers," he said. "People who postponed buying will come forward."

Globally, physical demand remains weak. "Dubai, Singapore, the US - everywhere gold is slow. Prices have gone up 75-80% from last year. People can't afford a double price in 12 months," he said.

Silver prices have also surged to what he described as "unimaginable levels," with a possible correction to 150,000-170,000 rupees per kg from current levels near 240,000 rupees.

On policy measures, Padmanaban urged restraint on import duties and revival of gold-related schemes. "If they do that, gold lying idle in lockers will come back to the system and imports will reduce," he said.

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