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New Delhi [India], May 26 (ANI): 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 the need for fewer rate hikes by central banks, along with demand for physical assets 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 percent rally in 2025, gold has risen 5 percent 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 percent, which “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 percent year-over-year on ETF outflows, while jewelry demand fell 23 percent. Central bank purchases rose 2 percent.
“Even as there was a pullout of ETFs, an important takeaway was the fact that demand for gold increased by 2 percent in aggregate in Q1 2026, indicating that structural bullish drivers remain in place,” the report said.
In the medium term, ICICI Bank Global Markets remains constructive.
“The global USD could come under pressure in the medium term, which 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 percent year-to-date on a 7 percent rupee depreciation and customs duty hikes from 6 percent to 15 percent effective May 13, 2026.
“We subsequently expect local gold prices to trade in the INR 1,50,000 per 10 grams to INR 1,80,000 per 10 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 10 grams, with risks of a flatter trajectory if the global uptrend proves modest. (ANI)
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