New Delhi [India], January 6 : After one of its strongest rallies in decades, gold prices may finally be due for a breather in 2026, however, analysts say the long-term bull case remains firmly intact, ICICI Direct Yearly Commodity Outlook said on Tuesday.
Analysts at ICICI Direct expect further US Federal Reserve rate cuts in 2026, and persistent concerns over rising global debt, and questions around long-term Fed independence are likely to keep gold attractive as a hedge against macroeconomic uncertainty.
"Concerns over Fed independence will be supportive. There are fears in the market that next Fed chair candidate would push for lower interest rate," the report said.
It sees strong downside protection for the yellow metal, with prices unlikely to fall below the $3,500-3,600 range even in a corrective phase. On the upside, gold could still test $4,800-5,000 levels if macro risks intensify or the dollar weakens further.
Gold surged more than 60% in 2025, hitting record highs as US rate cuts, aggressive central bank buying, geopolitical tensions, and concerns over US fiscal stability drove investors toward safe-haven assets. That sharp rise, however, has made prices vulnerable to profit-taking in the near term, with risk-reward now less attractive for fresh investors, it said.
Gold prices rallied sharply in 2025 and hit all-time high of USD 4550 as US Federal Reserve reduced rates by 75bps.
Analysts at ICICI Direct expect some moderation this year, especially if geopolitical risks ease or global trade tensions cool. Any meaningful progress toward peace between Russia and Ukraine, or stabilisation in US trade policy, could reduce the risk premium embedded in gold prices. Yet, a sharp correction appears unlikely.
Structural support for gold remains strong, led by sustained central bank buying as countries diversify reserves away from the US dollar. Global central banks have been adding roughly 1,000 tonnes of gold annually since 2022, with gold now emerging as the world's second-largest reserve asset after the dollar.
Also, persistent concerns about inflation and high government debt may continue to make gold valuable as hedge against uncertainties. Rising investment in ETF's and expectation of further weakness in dollar will provide support to the prices.
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