Domestic gold prices in India are anticipated to enter a consolidation phase, with ICICI Bank projecting the yellow metal to trade between ₹1.5 lakh and ₹1.8 lakh per 10 grams through 2026. This forecast comes despite a significant nearly 20% surge in prices recorded earlier this year, driven by a weakening rupee and increased customs duties.
Factors Influencing Gold's Outlook
While gold has demonstrated strong performance in recent years, including a 65% rally in 2025 and an additional 5% year-to-date in 2026, the market has experienced a correction since the onset of the West Asia conflict. ICICI Bank notes that gold prices have declined approximately 15% due to their inverse relationship with a strengthening US dollar.
The US dollar gained strength as geopolitical tensions escalated, reinforcing its appeal as a safe-haven asset and reflecting a comparatively robust US economy against other major global regions. This led investors to reduce exposure to non-dollar assets, including gold, contributing to the price pullback.
Shifting Investment Demand
- ETF Outflows: Investment demand for gold saw a 5% year-on-year decline in Q1 2026, largely attributed to outflows from Gold ETFs. Holdings in SPDR Gold ETFs, for instance, decreased from 1,047 tonnes in April 2026 to 1,038 tonnes in May 2026.
- Domestic Trends: Indian Gold ETF inflows also moderated significantly, with average inflows during March-April at ₹26.5 billion, a sharp drop from ₹240.5 billion in January.
- Jewellery Demand: Jewellery demand also weakened, falling by 23%.
These trends indicate a softening investor sentiment, with bullion exposure being scaled back after its previous use as a hedge against dollar weakness.
Medium-Term Support for Gold Prices
Despite the near-term moderation in demand, ICICI Bank maintains a constructive outlook for gold in the medium term. The report highlights several structural drivers that are expected to provide support:
- Central Bank Purchases: Central banks continue to show resilient demand, with purchases growing by nearly 2%.
- Safe-Haven Appeal: Ongoing global uncertainties sustain demand for gold as a safe-haven asset.
- US Dollar Concerns: Persistent concerns regarding the US dollar’s status as a reserve currency offer underlying support for gold.
- Domestic Factors: Locally, gold prices are expected to benefit from continued rupee depreciation and the pass-through effect of higher customs duties.
Globally, ICICI Bank anticipates gold prices will trade within a USD 4,400–4,600 per ounce range in the near term, with a projected increase towards USD 4,800–5,000 per ounce by December 2026. These global movements are expected to bolster domestic prices, keeping them within the ₹1.5–1.8 lakh per 10 gram range through 2026.