Gold finds itself caught in a complex global crossfire, with inflation, interest rate concerns and geopolitical tensions weighing on prices. Yet, record investment demand, Central Bank buying and persistent economic uncertainty continue to underpin its long-term appeal. Meanwhile, India’s gold policy raises critical questions about imports, rural livelihoods and investor confidence. Precious metal analyst Sanjiv Arole examines.
Gold seems to be stuck between a rock and a hard place, under siege! For, while on the one hand, the US Fed holds over it the Damocles sword of hike in interest rates due to the high inflation, on the other hand the US-Israel war over Iran pushes Brent crude oil prices towards its peak levels, thereby fuelling inflation. Moreover, it also appears to establish USD as the premiere currency of the world. A quick recap shows that gold, around $3,874 per ounce, is down by around 13% from the beginning of the year 2026, and is down by almost 44% from its all-time high level of $5,600 per ounce it attained towards the end of January 2026. Silver, closed 2025 at $71.099 per ounce and opened the New Year around $74.2 per ounce. Currently, around $49 per ounce, silver is down by around 51% from the beginning of the year and nearly 147% down from its all-time high level of $121 per ounce in late January.
Both, platinum and palladium are at their lowest for the year. Platinum is at $1,429 per ounce, while palladium, too, at $969 per ounce is languishing near its bottom price for the year, so far. Even the pause in interest rates by the US Fed did not ease the downward pressure on the precious metals prices. For, inflation continues its upward climb and peace in the war over Iran still not visible in the distant future.
Gold and the rest of precious metals basket continue to reside at their lowest levels for the year 2026.
Gold, in particular, is looking out to escape from the pincer grip of hike in interest rates and inflation fuelled by the war over Iran. Any sign of peace sees the oil prices drop and easing of inflation that is likely to give a boost to the gold price, but as long as the uncertainty over the Iran war continues gold is likely to be under the cosh.
Then, added to the mix are elections underway in the upcoming US mid-term polls for The House of Representatives as well as one-third of the US Senate. Any shift in the majority in both the houses of the US Congress as well change of government in Israel could see a change in the future of the war over Iran.
In spite of all of the above, gold analysts, experts, gold bugs, miners, bullion dealers, bankers, jewellers are still optimistic about the gold price and recent price surveys still predict the gold price to go beyond $5,000 per ounce, if not by the end of 2026, then in early 2027. And for a reason, consider the following:
(a) Over $10 trillion have been wiped out across major stock markets from their 2026 peak levels. The major stock markets down are: South Korea down around 40%, wiping out $2.96 trillion; Indonesia down by around 33%, wiping out $282 billion; Qatar down by 25%, wiping out $54 billion; China down by 20%, wiping out 2.78 trillion, Turkey down by 24%, wiping out $149 billion; Hong Kong down by 18.5%, wiping out $1.7 trillion, India down by 14%, wiping out $839 billion; Japan down by 13.5%, wiping out $1.38 trillion. Even the US is down by around 5% or so from its peak levels during 2026 (all figures as on October 23, 2026).
(b) Then, just over a year ago bitcoins were at their peak levels of $126,198.07, at the current levels of $77,227 they are way off their peak levels
(c) The USD index closed on October 30, 2026, at 101.96, still below its peak level for 2026 of 102.95.
All of the above are positive for gold. Apart from that, geo-political tensions abound with the Ukraine war, trouble brewing over most of the Middle East and the Persian Gulf region, trade relations unease over US tariff decisions that swing one way or the other, regional tensions elsewhere, de-dollarization, etc. The overhang of a recession/stagflation to emerge in the future and that continue to haunt the economies of the world. Some attractive GDP projections, in some countries, that hide the turmoil below the surface. Gold is the main beneficiary in all of the above.
Elsewhere, reports emanating from the WGC suggest that global gold demand reached historic highs in Q3 2026, driven by record institutional and ETF investment, while Indian markets experienced strong investment activity and seasonal recovery amidst shifts in jewellery consumption and GST/import duty dynamics.
Global demand: global gold demand hit a record high of 1,313 tonnes in Q3 2026, heavily propelled by investment demand exceeding 524 tonnes.
ETF inflows: Physically backed gold ETFs recorded their largest quarterly intake ever in history, attracting $31 billion (approx. 211 tonnes) in Q3 2026, including $10 billion in September alone. Total global gold ETF holdings climbed to a record 4,256 tonnes. UK attracted a massive 54 tonnes in Q3 and pushed European gold ETF inflows past the North American inflows.
Gold bars & coins: Gold demand remained robust at 316 tonnes as retail investors bought at dips during last quarter price corrections.
Jewellery demand: Gold jewellery demand was down by 19% to 371 tonnes in volume terms but gained 13% in value. In India, exchange of old jewellery for new appeared to gain traction. There are hopes of some recovery in the festival season by some analysts, but locals believe that the Dusheera demand was poor in volume terms.
Central bank purchases: Central Bank gold purchases continued to show strong structural momentum in Q3 2026, driven by reserve diversification and macroeconomic hedging. Overall CB gold purchases rose by 10% year-on-year, 220 tonnes (30% Q/Q), and top buyers included Kazakistan with 18 tonnes followed by Brazil with 15 tonnes. Active participants included China, Poland and Turkey. Around 66% of Q3 Central Bank demand remained officially unreported. China is reported to have purchased 66 tonnes in Q3 2026.
Overall, gold seems resilient, and except the jewellery sector that shows a decline in volume terms the demand is fairly robust. Lower prices could see jewellery demand emerge in price sensitive markets.
Meanwhile, in October 2026 around 17 asset management companies in India (FoFs), following instructions by SEBI and AMFI, were instructed to temporarily halt fresh subscriptions into gold ETFs. The temporary pause, in force from October 16, 2026, aims to cool down massive retail and festive season inflows into gold-backed funds, which in turn drive up physical import of gold imports, put pressure on foreign reserves and weaken the Indian rupee. There is no blanket ban on owning or trading gold or direct gold ETFs.
Coming on the back of hike in import duty to around 15% plus a GST of 3% on gold bullion and 5% on making charges, gold as investment option is virtually out of reach of the small investor, particularly in rural India. For, him gold is the only dollar denominated asset he can buy. The way the Indian rupee almost touched Rs.100 to a USD, before massive infusion by the RBI shored it back. So, a currency that is devaluing sharply, with low interest still offered by banks his options to earn money from his investments are limited. Probably, he can only gamble on the bourses or deposit his rupees into unscheduled banks offering higher interest rates. Both the options are fraught with risks for the uninitiated as companies go bankrupt and smaller banks are routinely closed by the RBI.
The small investors in gold, both in rural and urban India, buy gold when they get money from their trade or from their farm produce. They sell in times of distress or when they have to buy seeds. They also sell gold when there is need to buy fertilisers or implements for farming or for raw materials, goods for trade, etc. This churn out is huge due to small units and massive number of investors. Overall, that contributes to the 60% demand for gold from rural and semi urban areas of the country.
In the past, global crises in 1996-97 (East Asia currency crisis), the 2008 global meltdown of financial markets as well as the Covid-19 crises all did not severely impact rural India due to the cushion largely provided by gold. The current restrictions on gold coupled with the appeal not to buy gold for a year raises more questions than provide lasting solutions. Moreover, it threatens to upset the delicate balance in the rural economy despite Jan-dhan accounts (largely with no balance) and doles by the government to farmers, etc. Gold and silver are the backbone for the rural economy as well as its rural and semi-urban investors. The problem of high gold imports causing a strain on BoP is truly there. But, shooting down gold every time there is a crisis in BoP, is only an ad-hoc measure. Out-of-the-box measures are required, including taking a serious relook at gold mining and how to tap hoarded gold. Some incentive ought to be thought out to get the gold out from investors who hoard gold regularly. For, if the mismatch between the international and local prices continues to widen, it will not only lead to more of smuggled gold but a return the black or parallel economy.