Although there may have been some recovery in the market after the huge fall in gold prices in the last few days, there is very little possibility that the record high level of January 2026 will return soon. ‘BMI’, the prestigious research unit of Fitch Solutions, which keeps an eye on the international market, has made a big claim in one of its latest reports. BMI has reduced its previous estimate of the average price of gold for the year 2026 from $ 4,600 to $ 4,400 per ounce.
At present the yellow metal is trading around $4,026 in the global market. This new estimate of experts simply means that from the current level, gold can rise only by a maximum of 9 percent. After all, what happened that the pace of gold has started slowing down?
Dollar dominance is increasing problems
There is a direct rule of the international market. Whenever the US dollar strengthens, gold becomes more expensive for buyers of other currencies around the world. This naturally reduces the demand for gold. BMI estimates that the dollar index may currently remain in the range of 98 to 102. If this figure increases to 105 to 110 in the coming time, then any possible rise in gold prices will be completely put to rest.
Along with this, the mathematics of interest rates is also going against gold. Gold does not give any interest or dividend to its investors. BMI believes that the US Central Bank (Federal Reserve) will not cut its interest rates in the remaining time of 2026. Rates may remain at a high level of 3.75 percent. In such a situation, when investors are getting good returns from safe options like bonds, their inclination towards gold reduces.
The recovery of the economy changed the whole game.
For a long time, global markets were scared due to geopolitical tensions. But after the recent agreement between America and Iran, the risks related to global business have reduced to a great extent. The looming crisis regarding energy supply also seems to be averted. When the economy moves in the right direction, investors leave safe havens like gold and turn to riskier assets like the stock market. The report estimates the growth of the global economy to be 2.4 percent during the year 2026.
Decrease in tension is having a direct impact on the demand for gold. If the movement of merchant ships through the important sea route Strait of Hormuz continues normally, the demand for gold may fall even more. Apart from this, falling energy prices have also kept inflation under control. Generally, people invest money in gold to protect themselves from inflation, but when inflation is under control, then this huge support given to gold also becomes weak.
Will gold prices fall flat?
Despite all the negative signs, it is not at all true that gold will collapse completely. The BMI report makes it clear that many big central banks around the world are still continuously increasing their gold reserves. This heavy buying will continue to provide a strong support to the prices at lower levels.
However, the future direction will entirely depend on the next steps of the US Federal Reserve. If the Fed reduces interest rates or the dollar weakens in the coming time, gold may once again cross $ 4,500 an ounce. Conversely, if the dollar strengthens further or bond yields rise, prices could fall to $3,500 an ounce.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
