Gold seen consolidating near term before resuming uptrend on West Asia worries, stronger USD: Report
New Delhi, May 26
Gold prices are likely to consolidate in the near term as the West Asia conflict and a stronger US dollar cap upside, but ICICI Bank Global Markets expects the yellow metal to resume gains by late 2026 once geopolitical tensions ease and central banks face less pressure to hike rates.
According to ICICI Bank Global Markets' research report, gold is expected to trade in the USD 4,400/oz to USD 4,600/oz range in the near term, with downside risk to USD 4,200/oz if the West Asia conflict re-escalates.
"Once the conflict abates, gold prices can potentially go up as lower oil prices ensure need for fewer rate hikes by central banks along with demand for physical asset sustaining," the report said. It added that if the Federal Open Market Committee embarks on a possible tightening cycle in 2027, gold prices could see downward pressure.
The report noted that after a 65 per cent rally over 2025, gold has risen 5 per cent year-to-date in 2026, though most gains came before the US/Israel-Iran conflict began on February 28, 2026. Since then, prices have dropped 15 per cent, "primarily reflects the yellow metal's negative correlation with the global USD (DXY index)," the report said. It explained that the USD staged a strong comeback as the US economy is a net exporter of crude oil and US assets regained safe-haven appeal, triggering an unwinding out of non-USD assets including gold.
World Gold Council data for Q1 2026 showed investment demand for gold dropped 5 per cent YoY on ETF outflows, while jewellery demand fell 23 per cent. Central bank purchases rose 2 per cent. "Even as there was a pull out of ETFs, an important take-away was the fact that demand for gold increased by 2 per cent in aggregate in Q1 2026 indicating that structural bullish drivers remain in place," the report said.
Medium term, ICICI Bank Global Markets remains constructive. "The global USD could come under pressure in the medium-term that will increase appetite for non-USD assets," it said, citing steady central bank buying and gold's safe-haven appeal. It sees gold moving to USD 4,800/oz to USD 5,000/oz by December 2026 and USD 5,400/oz to USD 5,600/oz by December 2027. Downside risks include aggressive Fed tightening in 2027 if inflation proves stickier, which could lift US real yields and support the USD.
On the domestic front, local gold prices have rallied 20 per cent YTD on a 7 per cent Rupee depreciation and custom duty hikes from 6 per cent to 15 per cent effective May 13, 2026. "We subsequently expect local gold prices to trade in the INR 1,50,000 per ten grams to INR 1,80,000 per ten grams range over the remainder of 2026 assuming an average USD/INR range of 96.00," the report said. For 2027, it projects INR 1,60,000 to INR 1,90,000 per ten grams, with risks of a flatter trajectory if the global uptrend proves modest.
— ANI
Reader Comments
Interesting analysis by ICICI Bank. So they expect gold to reach $5,000/oz by 2027? In Indian terms that's ₹4.8 lakh per 10 grams if Rupee stays weak. Honestly, the custom duty hike this month is painful—it's basically a tax on traditional savings. But I guess when West Asia tensions ease and oil prices drop, gold will shine again. I'm holding onto my small stash, not selling now. Patience is key, yaar.
I'm an NRI based in Dubai, and watching gold prices here versus in India is interesting. The differential due to custom duties is huge—what costs $2,600/oz abroad becomes ₹1.5 lakh/10g here. I've been advising relatives back home to hold off on buying until the conflict situation stabilizes. The -15% drop post Iran conflict is a clear signal. But central bank buying + Rupee depreciation = long-term bullish. Smart money is buying on dips.
Gold is our family's traditional investment—my grandmother always said "sone mein hi sikka hai." But these prices are ridiculous! ₹1.5 lakh per 10 grams? My monthly salary can't even buy 5 grams. And the report says it could go to ₹1.8 lakh by end 2026? Main toh fikar mein pad gayi! The custom duty hike is just terrible timing for wedding season. I hope the Rupee at least stabilizes around 96 as they mention. 🤞
I respect the analysis but I think the report is a bit too optimistic. Yes, central banks are buying gold, but ETF outflows and 23% drop in jewellery demand show real pain. People are selling gold to meet daily expenses with inflation so high. Also, if Fed starts tightening in 2027 as they warn, all these projections go for a toss. I sold my
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.