Gold Prices May Correct Up to 8% Before Rallying to $5,500

Gold prices may experience a correction of up to 8% in the near term before resuming its rally towards $5,500 over the next 12-15 months, according to Motilal Oswal Financial Services Ltd. (MOFSL). The brokerage house has recommended investors to adopt a staggered accumulation strategy and remain patient.

The report highlights a shift in the factors driving gold prices, noting that geopolitical conflicts no longer automatically translate into gains for the precious metal. Gold started 2026 strongly on 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, lifting real Treasury yields and the US dollar, and weakening gold's safe-haven appeal. MOFSL notes that gold's long-term investment case remains intact but requires patience over impulse.

For investors with a 12-15 month horizon, current weakness should be viewed as an entry opportunity rather than a reason to exit, given gold's structural support from central bank buying, fiscal deterioration in developed economies, and its enduring role as a currency debasement hedge. Silver investors are advised to stay mindful of its added volatility due to its dual role as both a precious and industrial metal tied to electrification demand.