Just when economists and analysts were concerned over the dynamics of a sustained rise in international and domestic gold prices (see chart), there was a sharp pull back in the rally in October. This has caused experts to question whether gold prices will bounce back to record highs in 2026 and how de-dollarisation will play out in coming weeks.
Globally, in recent weeks, there have been changes to the structural demand for the dollar and its status as a reserve currency. It has also led to central banks diversifying from the dollar towards gold, where the share of the yellow metal in forex reserves of central banks has been rising. Institutions and individuals have also bought into the rally.
The share of gold in forex reserves in emerging market central banks has doubled to 9 percent, from 4 percent a decade ago, while the share of gold in developed markets is higher at 20 percent, according to a JP Morgan Global research note.
In the past week, gold prices have corrected by 8 to 12 percent. “We could see a time correction in gold over the next eight to 10 weeks, and prices are expected to move sideways,” says Anindya Banerjee, head of currency and commodity, Kotak Securities.
He adds that central banks globally are diversifying their forex into gold away from dollar. “Over the next four to five years, we expect the dollar to devalue further. This would be the perfect boost for gold and silver prices,” he explains. “Gold and silver could go back to record highs.”
Colin Shah, managing director of Kama Jewelry, is also bullish about where domestic and international gold prices could move. "The recent crash in gold price after a record high around Diwali is largely on much-anticipated lines, given the significant rally the yellow metal has witnessed in recent times,” he says. “This comes more as a price correction… and while there is a dip, this is temporary for the short term. In the long run, gold is expected to continue soaring new heights given the backdrop of global economic trigger.”
Investors perceive this as an opportunity and take the ‘buy the dip’ approach to book their profits, using gold as a hedge against inflation.
Also Read: Gold prices down post-Diwali, but metal still retains its sheen
Shah tells Forbes India that in a low interest rate regime, the gold price is expected to see continued strength and potential growth through 2025 and into 2026, despite recent sharp corrections in both international and domestic markets.
Domestic gold prices have seen a rise of 16 percent over the last month, driven by the increase in global rates and depreciation in the rupee against the dollar over the period. “At the same time, gold imports picked up from $5.44 billion in August to $9.6 billion in September, showing that demand in the local markets remains firm.
While this can be arguably because of the demand due to the festive season, the price trajectory of the yellow metal is likely to continue going upwards… of course, with resistance and price corrections at regular intervals,” Shah adds.
A common question every investor has is will the gold prices fall? “Hence, even if prices go back up after the current correction, the demand for gold will stay strong. Gold's main drivers are its role as a hedge against inflation and a safe-haven asset in times of global economic and geopolitical uncertainty,” Shah says. “The recent dip is thought to be a healthy correction, not a change in trend. Smart investors see price increases as proof of gold's worth and use price drops as good times to increase their strategic allocation.”
Even as gold could move through a time-wise correction, there are still uncertainties relating to India’s equities markets. The broad indices, Nifty and Sensex, have barely shown positive returns of near 9 and 8 percent respectively year-to-date. Mid- and small-cap indices have shown even poorer returns.The possibility that India could face longer-term impact of US-related trade tariffs, weak quarterly corporate earnings and still patchy consumption demand for goods and services have all led to weakened demand for listed stocks.
Independent consultant Ambareesh Baliga says: “Equities in India have given positive returns in recent years. Post the pandemic, it would be natural that prices had to correct, and averaging had to happen. This is the period where proper asset allocation needs to take place,” he tells Forbes India.
Baliga adds that this could be the beginning of the end for the dollar-run. Gold prices will move on their own, based on demand and supply. It is still possible that gold prices could move up in dollar terms, but based on pure local currencies, they may be stable or come down.
The deeper economic concern, Baliga says, is providing employment towards the new generation. “Credit growth is taking place only at the retail level. Income generation is taking place, but it is only from asset appreciation, which is a dangerous sign.”
First Published: Oct 27, 2025, 12:53
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