Can Gold Sustain Its Shine Into 2026?

In 2025, we witnessed much action in the bullion market. As we are set to bid a farewell to 2025, the dramatic moves are not over yet. On Dec 29, gold prices crashed sharply, offering a brief reprieve to retail buyers following a relentless surging spree.

Over the last ten days, the 24-karat segment had climbed to ₹75,500/100 grams. The surge in demand has contributed to a huge 81% YoY rally in 2025.

On Dec 29, the 22-karat gold rate slipped by ₹650 to ₹129,900 per 10 grams. The 24-karat price fell by ₹710 to ₹141,710

In the international market, spot gold eased to $4,512.74/ounce from a peak of $4,549.71 (on Dec 26).

Technical analysts are setting a pullback target for gold prices in the range of ₹139,300 - ₹139,700. Also, the MCX gold futures for Feb 2026 are trading at ~₹140,100 per 10 grams. With these movements, investors need to observe these levels closely. So, does this sudden price correction represent a temporary pause in a structural bull run or a warning sign for those entering at peak valuations?

What is Behind the Pre-Holiday Price Volatility?

The heavy profit-booking by traders following a historic rise is the main driver of the sudden retreat in gold prices.

For months, gold has been the preferred security for those looking for a hedge against currency depreciation and global instability.

The current cooling-off period might be a natural market reaction, as participants lock in gains before the transition into 2026.

This "cooling" of gold prices has sparked a renewed interest among domestic consumers who had previously retreated to the sidelines.

Many Indian households have a cultural and financial attachment for the yellow metal. With considerable rise in prices, they had postponed significant purchases during the recent record-breaking streak.

The immediate drop in gold prices might seem sharp. However, it is important to view it against the background of the metal's attractive performance throughout the last few months.

The volatility also reflects speculative deals and a structural imbalance where demand had briefly outdone gold supply.

Retail participants are now busy calculating their next moves. They seem to be balancing the desire for a bargain against the risk of further short-term corrections.

So, as the market settles into this new range, should investors look to accumulate on dips or wait for a more definitive trend reversal?

Global Cues Dominate the Domestic Gold Market

The trajectory of gold in India has remained deeply stuck to the macroeconomic signals that come from the US and other major central banks.

The sustained expectation of interest rate cuts by the Federal Reserve is an important driver for the bullish outlook into next year.

When interest rates are anticipated to fall, the opportunity cost of holding non-yielding assets like gold diminishes. This can make it more attractive to global fund managers.

The US dollar being under pressure, hovering near multi-month lows, has traditionally reinforced the appeal of bullion.

Furthermore, the trend of "de-dollarisation," where central banks around the world diversify their reserves away from the greenback, has continued to provide a firm floor for prices.

Also, the geopolitical trade tensions and economic conditions in major economies like China and the US are playing a pivotal role.

Analysts believe that as long as trade-related risks and geopolitical uncertainties persist, safe-haven flows will continue to find their way into the precious metals complex.

This transition to a more accommodative monetary environment globally is expected to act as a persistent tailwind for the asset class.

An Interplay of Two Factors

In conclusion, the pre-New Year volatility in the gold market can be a reminder of the complex interaction between:

• Domestic retail demand
• Global macroeconomic forces

As we head into 2026, the focus can remain on the Federal Reserve’s policy roadmap and the evolving geopolitical landscape.

The expected returns on dollar-denominated assets and bonds decline due to anticipated interest rate cuts. With this, the rational agents rebalance their portfolios toward tangible assets like gold to maintain their desired risk-adjusted returns. Here, gold’s lack of counterparty risk has made it an indispensable component during periods of systemic economic stress.

So, how do you plan to rebalance your gold exposure as the market navigates the transition from a year of record-breaking gains to a potentially more moderated growth phase?

Source:

Good Returns
CNBC