Gold prices remained volatile in recent months amid geopolitical tensions, shifting interest rate expectations and strong investment demand. While prices have corrected from peak levels, the broader structural case for gold remains intact.
To understand this better, Cafemutual spoke to Chirag Mehta, CIO, Quant Mutual Fund and Vikram Dhawan, Fund Manager – Commodities, Nippon Life India AMC.
What shaped gold prices recently
Gold saw sharp volatility after hitting record highs earlier this year. The escalation of the US–Israel–Iran conflict pushed prices up initially as investors moved to safe-haven assets.
However, prices corrected sharply in April due to rising US bond yields and expectations of higher-for-longer interest rates. Investors sold gold to meet liquidity needs, leading to one of the sharpest monthly declines in recent years.
There was also profit booking and unwinding of positions across gold and silver ETFs and global markets. Some central banks sold reserves to support their currencies, adding to short-term pressure.
Despite this unprecedented wave of supply within a short period, both gold and silver prices have remained resilient, holding above their December 2025 closing levels.
What may impact gold going ahead
The direction of geopolitical tensions, especially in the Middle East, will remain a key trigger. Any easing could reduce inflation concerns while escalation may support gold prices.
Interest rate expectations in the US will also play a major role. Higher real yields tend to weigh on gold while softer rate outlook can support prices. Gold is expected to remain supported in the first half of FY27 with stronger momentum likely in the latter half of FY27.
Short- to medium-term outlook
Gold may remain volatile in the near term due to global uncertainties and interest rate movements.
However, the broader outlook remains supportive. Factors such as geopolitical risks, high global debt and diversification away from the US dollar continue to support demand.
Allocation and positioning
Experts say the recent correction has made gold relatively more attractive compared to earlier highs. The current price range may present a relatively more favorable entry point within an ongoing structurally supportive backdrop.
Gold and silver remain under-allocated in global as well as Indian portfolios, leaving significant room for increased allocation.
From a portfolio perspective, gold continues to act as a hedge against uncertainty while also helping diversification.
Global debt, especially sovereign debt, continues to set new records; thus, at some point, even if not in the immediate future, diversification into gold and silver may become a hygiene rather than a novelty.
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