Gold Price Forecast: 6-8% Dip Before $5,500 Rally (MOFSL)
By Market Desk
Motilal Oswal predicts a 6-8% gold correction before a rally to $5,500+ in 12-15 months. Learn their staggered accumulation strategy and domestic targets.
Motilal Oswal Financial Services Ltd. (MOFSL) forecasts a potential near-term correction of 6-8% in gold prices. This dip is expected to precede a significant rally, pushing gold to surpass USD 5,500 over the subsequent 12-15 months.
The firm’s H1 2026 Precious Metals Outlook recommends investors adopt a staggered accumulation strategy. Patience is advised during any potential price declines.
Domestic Market Projections
For the Indian domestic market, MOFSL provides specific accumulation levels and medium-term targets. These figures are based on an assumed USD/INR exchange rate of 95.5.
- Accumulation Levels: Rs 1,33,000 to Rs 1,30,000
- Medium-Term Targets: Rs 1,68,000, then Rs 1,93,000
Gold’s 2026 Performance Drivers
Gold initiated 2026 with robust performance, propelled by several key market factors. These drivers contributed to its strong start.
- Uncertainties surrounding tariffs
- Significant inflows into Exchange Traded Funds (ETFs)
- Consistent central bank gold purchases
- Expectations of interest rate cuts by the US Federal Reserve
However, market sentiment shifted during the second quarter, introducing new pressures. Concerns over inflation began to influence investor outlook.
- Inflation fueled by tariffs and the US-Iran conflict
- Anticipation of a ‘higher-for-longer’ interest rate environment
- Rising real Treasury yields
- A stronger US dollar, diminishing gold’s traditional safe-haven appeal
Sustained Long-Term Investment Case
Despite these short-term challenges, MOFSL maintains that the long-term investment case for gold remains robust. Several structural factors support this outlook.
- Ongoing structural support from central bank buying
- Deteriorating fiscal health of developed economies
- Gold’s enduring role as a hedge against currency debasement
The brokerage house emphasizes that the direction of US inflation and the Federal Reserve’s future rate decisions will critically influence gold’s performance. Investors with a 12 to 15-month horizon should view current weakness as an entry opportunity.
Silver investors are cautioned to be mindful of its inherent volatility. This is due to its dual function as both a precious metal and an industrial commodity, with demand tied to electrification.