After a brief correction last month, gold prices are back in an uptrend, bringing the yellow metal close to its all-time high.
The conflict in West Asia have once again pushed gold to the forefront of investors’ minds. With prices rising sharply over the past three years, bulls believe the rally could still have room to run.
But whether gold continues climbing in 2026 will depend largely on the factors currently driving the surge, most notably geopolitical tensions and investor behaviour in the market.
An incredible rise
Gold has delivered strong returns in recent years. In 2024, the metal gained about 20%, compared with the Nifty’s 8.7% rise.
The momentum accelerated in 2025. Gold prices climbed from around ₹78,000 per 10 gm to about ₹136,000, an increase of roughly 75% during the year.
In late January, gold peaked at nearly ₹183,000 per 10 gm. After a brief correction, prices have begun trending upward again.
The question now is whether the rally can continue, and whether the conflict in the West Asia could trigger another leg higher.
2026 gold price outlook
Can gold continue to rise?
In the near term, the answer appears to be yes. The upward momentum in prices remains strong. But sustaining that momentum through 2026 and beyond will depend on whether the factors supporting the rally remain intact.
Many so-called experts have already offered predictions about where gold prices might go. We avoid making such forecasts in our editorials.
What matters more is the durability of the forces currently pushing prices higher. The most immediate of these is the ongoing war in West Asia.
War in West Asia
Gold has long been seen as a store of wealth during periods of political turmoil. Throughout history, investors have turned to physical gold when uncertainty rises. That tendency is unlikely to change.
If the conflict ends quickly, gold prices may struggle to sustain a sharp rise. The uptrend could taper off in the short term.
If the war escalates, however, gold could climb further, potentially crossing ₹200,000 per 10 gm.
Another possibility is that the conflict drags on intermittently for months. Even that scenario could remain supportive for gold prices.
In the short term, speculators will watch closely for signs of de-escalation. Long-term investors, however, should avoid focusing too much on short-term price swings.
But geopolitics is not the only factor influencing the market.
Greed and fear
Sometimes asset prices rise simply because they are already rising.
Investors buy because they expect others to keep buying, and they want to join the momentum.
In financial markets, this behaviour is often described as riding price momentum.
Short-term traders add extra buying pressure, amplifying the upward move. Fear of missing out, or FOMO, can further fuel demand.
Fear can push markets in both directions. It can trigger selling when prices fall, but it can also drive buying when traders worry about missing easy gains.
If you are considering buying gold now, it is worth remembering that speculation is unpredictable. Markets rarely reward the idea that one can simply ride along with speculators and make easy profits.
If that were possible, every trader would be rich—which clearly is not the case.
Conclusion
Gold’s short-term momentum remains strong.
But investors should be careful not to get carried away. When the market becomes fixated on rising prices, especially during geopolitical crises, it is easy to forget that trends can reverse.
A reminder came last October, when many leveraged traders were caught on the wrong side of the market.
While bulls may currently have the upper hand, investors should closely watch the factors driving gold higher.
At Equitymaster, we believe investors should allocate about 5-10% of their portfolio to gold. However, gold should not be seen as a substitute for other assets.
Holding some precious metals in a long-term portfolio can make sense. Speculating on short-term price movements usually does not.
Anyone considering investing in gold should do so with a long-term horizon, well beyond 2025 or 2026. Recent price gains alone do not make gold a compelling short-term investment.
Do your due diligence before making any financial investment.
Happy investing.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
This article is syndicated from Equitymaster.com.