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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)
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