Gold’s rally pauses,
but long-term bullish story intact; Motilal Oswal sees prices touching $4,700
THEBUSINESSBYTES BUREAU
MUMBAI, NOVEMBER 5, 2026
Gold and silver may be navigating a volatile phase after their
spectacular rally, but the long-term investment case for precious metals remains
firmly intact, with gold expected to touch $4,500–$4,700 per ounce in the
medium term, according to a latest report by Motilal Oswal Financial Services
Ltd (MOFSL).
Titled 'Gold's Rally: Deferred, Not Derailed', the Precious Metals
Quarterly report maintains a positive outlook on the bullion market,
identifying recent price corrections as potential accumulation opportunities
rather than a reversal of the broader upward trend.
Gold, which surged to a record high of nearly $5,600 per ounce in January
2026, subsequently corrected below the $4,000 mark before staging a recovery.
Silver also witnessed sharp movements after climbing beyond $100 per ounce,
followed by a steeper correction. Currency fluctuations, particularly movements
in the US dollar and the rupee, further amplified volatility in domestic
bullion prices.
Unlike the largely one-way rally of 2025, precious metals have
experienced significant price swings this year amid changing expectations
surrounding US monetary policy, persistent inflation, elevated bond yields and
geopolitical uncertainties.
The report noted that the direction of US real yields, movements in the
dollar and the Federal Reserve's interest-rate policy would remain critical
determinants of gold prices in the coming months. While higher yields and a
stronger dollar could exert near-term pressure, central-bank diversification,
fiscal uncertainties and sustained investment demand are expected to provide
structural support.
"Gold continues to retain its importance as a defensive asset amid
global economic and geopolitical uncertainties. However, its near-term
trajectory will remain sensitive to the US Federal Reserve's monetary policy,
inflation trends, movements in the US dollar and real bond yields,"
Navneet Damani, Head of Research – Commodities at MOFSL, said.
He noted that the 25-basis-point rate hike by the US Federal Reserve in
September, taking the policy rate to 3.75–4.00 per cent, had reinforced
concerns over tighter monetary conditions. Nevertheless, central-bank diversification,
sustained investment demand and fiscal uncertainties continued to support the
precious metal.
In India, elevated gold prices have moderated discretionary jewellery
purchases, although wedding-related buying and investment demand have remained
relatively resilient, he added.
The report highlighted encouraging investment flows despite the sharp
correction in bullion prices. Global gold exchange-traded fund (ETF) holdings
rose by around 187 tonnes during August and September 2026, taking total
holdings to a record 4,256 tonnes. Third-quarter inflows also touched an
unprecedented USD 31 billion.
In the domestic market, gold ETF inflows surged 71 per cent
month-on-month to Rs 44.5 billion in September, while silver ETFs attracted
inflows of Rs 19.7 billion. However, India's gold imports moderated to USD 1.8
billion in September from USD 2.3 billion in August, reflecting the impact of
elevated prices and measures aimed at restraining bullion inflows.
Manav Modi, Commodities Analyst at MOFSL, said gold and silver were
operating in a more complex market environment, with safe-haven demand and
macroeconomic headwinds driving heightened volatility.
"While elevated US Treasury yields and a stronger dollar have
weighed on prices, underlying investment demand remains encouraging. Global
gold ETF holdings have risen to record levels, with significant inflows during
the third quarter, indicating that investor interest in gold remains resilient
despite recent price corrections," he said.
Silver, he added, offered greater upside potential but came with
significantly higher price volatility.
The report also examined India's traditional festive-season demand,
particularly during Diwali and Dhanteras, when gold and silver purchases
receive a boost from cultural preferences, wedding-related buying and
investment considerations.
It observed that festive demand historically had a stronger correlation
with domestic premiums, imports and physical buying volumes than with
international bullion price movements.
Over the past decade, domestic Diwali gold prices have climbed from
approximately Rs 30,000 in 2016 to nearly Rs 1.50 lakh in 2026, reflecting the
substantial appreciation in bullion prices. Historical trends also suggest that
gold has generally delivered stronger returns during the 30 days preceding
Diwali than in the subsequent 30 days. The trend was particularly pronounced in
2025, when gold gained nearly 20 per cent and silver around 38 per cent in the
month leading up to the festival.
Looking ahead, MOFSL expects gold's next major turning point to emerge
when real yields stop rising, particularly if persistent inflation, fiscal
concerns or slowing economic growth trigger a shift in monetary policy
expectations.
Maintaining its buy-on-dips strategy, the brokerage has identified an
accumulation range of USD 3,800–3,900 per ounce for international gold, with a
short-term target of USD 4,200 and a medium-term target of USD 4,500–4,700 per
ounce.
In the domestic market, assuming a USD/INR exchange rate of 96, it sees
Rs 1,35,000 as a favourable accumulation level, with a short-term target of Rs
1,48,000 and a medium-term target of Rs 1,60,000–1,68,000.
The analysts jointly emphasised that investors should avoid chasing price
momentum and instead adopt a disciplined accumulation strategy during
corrections.
"While near-term volatility cannot be ruled out, we believe the long-term investment case for precious metals remains intact. Silver offers greater upside leverage, but investors should remain mindful of its significantly higher volatility," Damani and Modi said.
The report concluded that precious metals would continue to play an important role in wealth preservation and portfolio diversification, with short-term corrections potentially providing investors an opportunity to build exposure at more favourable levels.
