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What Powered the 2025 Gold Rally and What 2026 Could Hold?

From record-breaking returns to central bank behavior and future price signals

Introduction: Gold’s Return to Centre Stage Gold had already earned its reputation as a safe-haven asset. But 2025 elevated it from a hedge to a headline act. Prices crossed psychological milestones both globally and in India, forcing investors to re-evaluate gold not just as protection—but as performance. This blog breaks down how gold performed in 2025, why it rallied, whether central banks are still buying, and what current signals suggest for 2026. Gold vs. Equity: How Gold Delivered Multi-Bagger Returns in 2025

Gold delivered one of its strongest annual performances in decades, even outperforming many equity indices.

Global prices:
 Gold rose by ~65% in USD terms, crossing $4,000 per ounce during the year.

  • Indian markets (MCX):
     Gold rallied by ~75%, breaching the landmark level of ₹1,00,000 per 10gms.

    This performance placed gold among the top-performing global assets of 2025, outperforming many equity indices and reinforcing its role during periods of macro uncertainty.
The 5 Engines Behind the 2025 Gold Bull Run
Gold’s rally was not driven by a single trigger, but by multiple macro forces moving in the same direction.
 1.Fed Rate-Cut Expectations Expectations of interest rate cuts by the US Federal Reserve reduced the opportunity cost of holding gold, which does not generate yield. As real rates softened, gold’s relative attractiveness improved.

2. Geopolitical and Economic Uncertainty Persistent geopolitical tensions, trade fragmentation, and global economic slowdown risks increased demand for assets perceived as stores of value.

3. Weakening US Dollar As growth expectations cooled, the dollar lost strength, providing a mechanical tailwind to dollar-denominated commodities like gold.

4. De-Dollarisation Trend This phase of de-dollarisation is not about replacing the dollar, but reducing dependence on it. Countries increasingly prefer diversifying reserves into assets that sit outside the traditional dollar system.

5. Fresh Institutional Participation A notable policy change allowed NPS subscribers in India to invest in gold and silver ETFs, potentially widening the institutional demand base over time.

 

Central Bank Accumulation: Why the RBI is Buying More Gold?

central bank accumulation remains a structural support for gold. Global central banks continue adding gold to their reserves to:
  • Diversify away from the US dollar
  • Reduce sanction and geopolitical risk
  • Strengthen reserve stability
India’s Position
  • India’s gold reserves crossed $100 billion for the first time.
  • While the pace of buying slowed in 2025, holdings remain historically high.
Who Has Room to Buy More? Gold as a percentage of reserves:
  • USA: ~80%
  • India: ~15%
  • China: ~8%
         
    This disparity suggests that countries like China and India still have strategic headroom to increase gold allocation over the long term. Gold Price Forecast 2026: What Technical and RSI Suggest
The outlook for 2026 remains constructive, though not without risks. Technical Signals
  • RSI currently near 72, indicating strong momentum but some near-term caution.
  • Historically, RSI levels near 85 have preceded short-term corrections of ~10%.

    Street Expectations     According to global bank forecasts cited by research firms:
  • Gold is expected to trade in the ₹1.2–1.5 lakh per 10 gms range in 2026.
  • Sustained macro uncertainty and central bank demand remain key assumptions.
The key takeaway is that gold’s next phase may be more volatile, but it continues to be supported by structural drivers rather than speculative excess. 

  Conclusion: Is Gold a Strategic Portfolio Asset for 2026?

Gold’s 2025 rally was not a panic-driven spike — it was a macro-aligned move. Rate expectations, currency dynamics, geopolitical risks, and central bank behaviour all pointed in the same direction. As 2026 approaches, gold appears to be transitioning from a crisis hedge to a strategic portfolio asset. The pace of returns may moderate, volatility may rise, but the forces that pushed gold higher in 2025 have not disappeared. Gold’s story, much like its role, continues to evolve — quietly, steadily, and with global attention firmly attached.