Gold at the crossroads: Is there more steam left in the yellow metal?

Gold outlook for 2026

Precious metals have been enjoying a strong bull run in recent months, with gold and silver emerging as standout performers. Silver, in particular, has captured market attention by touching an all-time high of around Rs 2,00,000 per kg. Against this backdrop, a natural question arises among market participants:

Does the rally in gold still have substance, or has most of the upside already been priced in?

To answer this, it is important to step back and evaluate gold through both fundamental and technical lenses, rather than focusing only on short-term price movements.

One of the most significant geopolitical developments impacting gold sentiment is the recent move by European Union member states to indefinitely immobilize Russian central bank assets held in Europe, amounting to nearly €210 billion. These assets will remain frozen until Russia ends the war in Ukraine and provides reparations.

While this action is conditional and theoretically reversible, the precedent it sets is far more important than the immediate financial impact. For the first time in modern history, assets belonging to a sovereign central bank, which were traditionally considered risk- free have been exposed to geopolitical and policy risk.

This episode sends a clear message to central banks and sovereign entities worldwide: even foreign exchange reserves are not entirely risk-free if they are held outside domestic control. This realization fundamentally alters the perception of “safe assets.”

Gold stands out uniquely in this context. Unlike paper assets or foreign-held reserves, gold:

* Is not a liability of another country

* Cannot be frozen by foreign authorities when held domestically

* Carries no counterparty risk

As a result, such geopolitical developments are likely to accelerate central bank diversification into gold, a trend that has already been visible over the past few years. Increased central bank demand tightens effective supply in the market, which, over time, acts as a strong structural support for gold prices.

Governments across the world are now paying much higher interest on their borrowings than they did in the past. This is the result of years of heavy debt accumulation combined with a period of higher interest rates.

As interest payments rise, a larger portion of government income is used to service debt, leaving less room for development spending and economic support. Over time, this creates pressure on government finances and weakens confidence in paper currencies.

In such a situation, gold becomes more relevant. Gold is not linked to any government’s balance sheet and does not carry the risk of default or policy mismanagement. When debt pressures rise, governments and central banks often prefer easier monetary conditions to keep interest costs manageable. This reduces real returns on financial assets, which supports gold prices. From a long-term perspective, rising government interest burdens strengthen gold’s role as a reliable store of value and a hedge against fiscal and monetary uncertainty.

The below chart perfectly shows the correlation between the rising interest cost and gold prices over the years.

Beyond fundamentals, technical indicators also provide valuable insight into gold’s near-term potential.

One such metric is the Gold–Silver Ratio, which measures how many units of silver are required to buy one unit of gold. Historically:

A rising ratio indicates gold outperforming silver

A falling ratio indicates silver outperforming gold

With silver’s sharp rally, the gold–silver ratio has now declined to levels last seen in 2021, hovering near a long-term historical support zone. In the past, such levels have often marked turning points, where gold begins to outperform or catch up with silver.

Given that silver has already seen a sharp and extended rally, the current ratio suggests that gold may be relatively undervalued on a comparative basis, especially when viewed alongside supportive macro and geopolitical fundamentals.

In my view, gold continues to exhibit strong underlying strength, even after its recent run-up. The convergence of:

• Geopolitical uncertainty and reserve-risk awareness

• Expectations of monetary easing

• Supportive long-term technical structures

These factors suggest that gold still retains meaningful momentum potential, particularly as a strategic hedge rather than a short-term trade.

While silver has taken the spotlight recently, the broader setup indicates that gold may be preparing for a catch-up phase, supported by both fundamentals and technical indicators. For investors seeking stability, diversification, and protection against macro uncertainty, gold continues to remain a relevant and resilient asset in the current market environment.