Gold is down over 25% from peak in 2026. Will it lose more shine? Here’s what analysts say

Gold had a bumper 2025, with price surging over 70 per cent. The precious metal went on to hit a lifetime high of close to Rs 1.93 lakh per ten gram in the futures market on the MCX on January 29, 2026. However, prices have cooled since with gold for August delivery trading at around Rs 1.45 lakh on the MCX on Friday, July 10, 2026.Thats a close to 25 per cent decline from the peak.

Things have been no different in the global market. After touching a record high of around $5,589 per ounce on January 28, 2026, the yellow metal was quoted at around $4,100 per ounce, down around 27 per cent.

Gold typically shines brightly in times of uncertainty as investors flock to it as a safe haven asset. Last year, gold shined amid the US import-tariff related uncertainty. But, as the conflict in West Asia sent crude oil price surging and raised inflation worries and potential rate hikes in the US, gold has been pretty volatile.

Expectations of interest rate hike by the US Federal Reserve and a firmer dollar have weighed on prices, say analysts.

“Following declines brought on by the Iran conflict and higher oil, inflation and yields, which pumped up the US dollar, gold came in for a second round of liquidation as new Fed Chair Kevin Warsh signaled a hawkish policy tilt,” said James Steel, chief precious metals analyst at HSBC Global Investment Research.

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Rate hike expectations may now be largely factored in, but still could limit gold rallies, he felt. 

Investors will be keeping a close watch on West Asia. After signs of peace between US and Iran cooled oil prices, tensions have flared up once again this week. Should this renewed conflict escalate and last longer, it could once again push up oil prices and raise inflationary pressures in many markets.  

India consumes on average 700-800 tonnes of gold each year, but 85-90 per cent of it is imported. So, the depreciation in the rupee against the US dollar also has a bearing on the price of gold.

The recent correction in gold from its recent peak appears healthy after the strong bull run witnessed through 2024 and 2025, said Hareesh V. head of commodity research at Geojit Investments.

“In the near term, prices are likely to remain range-bound as markets digest earlier gains and investors reassess the outlook for interest rates, central bank buying, and global economic growth,” said Hareesh. 

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Gold has historically moved through cycles, with strong rallies often followed by extended periods of consolidation or bear markets. However, it would be still too early to conclude that the current correction marks the beginning of a multi-year bear phase, he added. 

A big driver for gold prices in recent years has been huge buying by central banks. Over the past four years global central banks have accumulated on average 1,000 tonnes of gold, which is significantly higher than the 500 tonnes average in preceding decade, according to World Gold Council (WGC).

WGC’s gold reserves survey 2026, in June, noted that 89 per cent of the respondents believe global central bank gold reserves will rise over the next 12 months. Around 45 per cent of the respondents said their own gold reserves will also increase over the same period.

Exchange traded funds were also big gold buyers in 2025 as investment demand surged. Investors have trimmed some of their holdings in recent months. In June, for instance, WGC noted that gold ETFs saw outflows $8.9 billion. Despite that, global gold ETF inflows remained positive in the first half of 2026 at $8 billion.

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In the domestic market too, gold ETFs saw strong inflows. But, trends have been mixed in recent months. Gold ETFs saw outflows of Rs 725 crore in May 2026, but rebounded with a strong Rs 3,443 crore in inflows in June, according to data from Association of Mutual Funds of India.

Nehal Meshram, senior analyst, Morningstar Investment Research, pointed that on a cumulative basis gold ETFs attracted net inflows of about Rs 37,319 crore during first half of 2026, significantly higher than the Rs 8,021 crore in the first half of 2025.
“The sharp recovery in June flows suggests that the weakness witnessed in May was temporary and largely driven by tactical profit booking. The strong first half mobilization and renewed June inflows indicate that investors continue to maintain a favourable view on gold, while balancing growth-oriented investments with defensive portfolio allocations,” said Meshram.
Analysts at Tata Mutual Fund feel in the medium to long-term, gold will remain in a structural bull market. However, in the near-term the geopolitical uncertainties will weigh.

“We believe uncertainties over US-Iran peace deal, US Fed rate dilemma, stronger dollar and higher yields may keep gold prices in current range forming the base for the investors to accumulate gold as a long-term investment. The increased probabilities for US Fed rate hike may keep some pressure on gold for short term with higher yields,” the analysts said.

Hareesh of Geojit also stated that gold remained a useful portfolio diversifier, despite near-term consolidation risks. Investors can continue maintaining exposure to gold through a systematic investment approach, rather than chasing short-term price movements, he said.

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