Gold May Correct Up to 8% Before Reaching $5,500, Says Motilal Oswal Financial Services Ltd.

Motilal Oswal Financial Services Ltd. (MOFSL) predicts that gold may correct by up to 8% in the near term before resuming its rally towards USD 5,500 over the next 12-15 months.

The brokerage house advised investors to adopt a staggered accumulation strategy and remain patient, citing a shift in the factors driving gold prices. Geopolitical conflicts no longer automatically translate into gains for the precious metal, according to MOFSL's report.

Gold has been strong this year due to tariff uncertainty, robust ETF inflows, central bank buying, and expectations of US Fed rate cuts. However, the narrative shifted in Q2 as tariffs and the US-Iran conflict fueled inflation concerns, prompting markets to price in higher-for-longer rates and lifting real Treasury yields.

MOFSL recommended a staggered accumulation strategy for long-term investors, noting that gold could witness a correction of 6-8% from current levels before targeting USD 4,800, followed by USD 5,500+ over a 12-15 month horizon. On the domestic front, assuming USD/INR at 95.5, the brokerage house identifies accumulation levels between Rs 1,33,000-Rs 1,30,000.

The report also highlighted that gold's long-term investment case remains intact, but the coming year calls for patience over impulse. Investors may consider buying in tranches on declines rather than attempting to time the market bottom.