Gold may correct by 8% before rallying to USD 5,500: MOFSL report

Gold may correct by up to 8% before rallying to USD 5,500 over 12-15 months, says MOFSL. The brokerage advises a staggered accumulation strategy, noting that geopolitical conflicts no longer automatically boost prices. Patience is advised.

Gold may correct by up to 8 per cent in the near term before resuming its rally towards USD 5,500 over the next 12-15 months, Motilal Oswal Financial Services Ltd. (MOFSL) said in its H1 2026 Precious Metals Outlook, advising investors to adopt a staggered accumulation strategy and remain patient.

Investment Strategy and Price Targets

MOFSL report highlighted a shift in the factors driving gold prices, noting that geopolitical conflicts no longer automatically translate into gains for the precious metal. It has recommended a staggered accumulation strategy for long-term investors, noting "gold could witness a correction of 6-8% from current levels before targeting USD 4,800 (Rs 4,56,564.24), followed by USD 5,500+ (Rs 5,23,146.53) over a 12-15 month horizon." On the domestic front, assuming USD/INR at 95.5, the brokerage house identifies accumulation levels between Rs 1,33,000-Rs 1,30,000, with medium-term targets of Rs 1,68,000 followed by Rs 1,93,000."

Shifting Market Dynamics

Gold started 2026 strongly on tariff uncertainty, robust ETF inflows, central bank buying and expectations of US Fed rate cuts. However, the narrative shifted in Q2 as tariffs and the US-Iran conflict fuelled inflation concerns, prompting markets to price in higher-for-longer rates, lifting real Treasury yields and the US dollar and weakening gold's safe-haven appeal.

Long-Term Outlook and Recommendations

"Gold's long-term investment case remains intact, but the coming year calls for patience over impulse," the brokerage house said flagging two major factors -- the direction of US inflation and the Fed's rate decisions under its new leadership.

Until real interest rates begin to fall meaningfully, gold could remain range-bound or face a further 6-8% correction in the near term.

Investors may therefore consider staggered accumulation, buying in tranches on declines rather than attempting to time the market bottom.

"For those with a 12 to 15 month horizon, current weakness should be viewed as an entry opportunity rather than a reason to exit, given gold's structural support from central bank buying, fiscal deterioration in developed economies, and its enduring role as a currency debasement hedge," the report said.

Considerations for Silver Investors

At the same time, the brokerage house recommended Silver investors to stay mindful of its added volatility, "given its dual role as both a precious and industrial metal tied to electrification demand." (ANI

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)