Gold Prices Signal Strong 2026 Outlook

An AI bubble meltdown may push investors away from equities and into gold, while a softer dollar and low rates provide foundational support for price gains.

Gold has reached once-unthinkable prices at USD 4,468 per troy ounce (31.1347 grams) in 2025, gaining over 72.25 per cent this year as of 23 December 2025. Due to record-high prices in the international market, there is reduced interest in spot buying in the Indian bullion market.

In Mumbai, bullion dealers are offering gold at a 1 per cent discount on international market prices, at the all-time high price of Rs 137,000 per 10 grams, excluding 3 per cent GST.Looking ahead to 2026, major themes that carried the gold price to new heights this year will continue to underwrite its trajectory in the months ahead, boosting the metal even further.

Goldman Sachs sees gold prices climbing 14 per cent to USD 4,900 by December 2026 in its base case, it said in a note on Thursday, while citing upside risks to this view due to a potential expansion of diversification to private investors.

Safe-Haven Demand

Its views on commodities for 2026: Goldman Sachs said it expects structurally high central bank demand and cyclical support from US Federal Reserve interest rate cuts to lift the price of gold. It continues to recommend long exposure in the yellow metal. Strong gold exchange-traded fund (ETF) inflows and central bank purchases are projected to continue into next year as investors, particularly in the West, increasingly recognise the hedge value of gold.

Joe Cavatoni, senior market strategist at the WGC, said, “I think the performance of gold (in 2025) speaks volumes about the global perspective on risk and uncertainty. My sense is that we're going to continue to see these challenges in 2026.”

Risk Factor

This will translate into continued strong ETF flows and central bank demand for the monetary metal for 2026, although central bank buying may come at a slower pace than in the past few years. Another potential 2026 tailwind for gold is a correction in artificial intelligence (AI) stocks. Analysts are increasingly warning that this could happen, and it's possible that AI bubble meltdown concerns may push more investors away from equities and into gold in the coming year. Bank of America Global Research told its clients in late October that gold may be one of the strongest hedges if the AI bubble bursts.

“Optimists buy tech, pessimists buy gold, and hedgers buy both.” The uncertainty generated by Trump’s tariffs is beginning to slow down world trade, which has negative consequences for the AI sector. That will be the thing that ends up popping (the AI bubble). The gold price has an inverse relationship with the US dollar and real interest rates. Analysts forecast a weaker dollar and lower rates by mid-2026. A softer dollar and a low-rate environment would provide foundational support for further gold price gains.

The resulting inflation is expected to push the Fed toward quantitative easing (QE), or the purchasing of government bonds to increase money supply and lower long-term rates, which would further bolster the yellow metal's appeal.Global financial services firm Morgan Stanley sees demand for gold from ETFs and central banks pushing the gold price back up above USD 4,500 per ounce by mid-2026. The World Gold Council (WGC) also expects the themes of risk and uncertainty to continue driving gold. Overall, most analysts' gold price predictions for the upcoming year are in the USD 4,500 to USD 5,000 range.

(The writer is a commodities researcher-cum-analyst. Views personal.)