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Informist, Tuesday, Dec. 9, 2025

 

MUMBAI – Fitch Solutions company BMI has raised its average gold price forecast for 2026 to $3,700 per ounce from its previous estimate of $3,200 per ounce. "We expect gold to remain elevated in December 2025 and into 2026, with dovish Fed sentiments and a weaker US dollar boosting gold's attractiveness," it said in a report. However, prices are likely to moderate later in 2026, falling below $4,000 per ounce as the monetary easing cycle that began in 2024 starts to lose momentum, and in particular as the US Federal Reserve eventually pauses rate cutting, it said.

 

At 1404 IST, the most-active February gold contract on the COMEX was down 0.1% at $4,212.3 per ounce.

 

Gold prices are also likely to moderate as the dollar is expected to stabilise. The global economy is set to steady as trade tensions ease and policies remain supportive, reducing the need for safe-haven assets, and inflation is expected to keep cooling, which weakens gold's appeal as an inflation hedge, BMI said.

 

Gold has seen a historic year of multiple record highs in 2025 due to heightened tariff uncertainty, tensions in West Asia, the US government shutdown, Fed rate cut, and a weak dollar, culminating in the all-time historic high of $4,382 per ounce in October. Prices have weakened since then, with Fed rhetoric leaning towards no rate cut over most of November. As the latest round of US economic data points towards a weakening labour market, the return of a dovish Fed now has markets pricing in another rate cut this month, fuelling gold prices towards yet another impending historic high.

 

In the longer term beyond 2026, gold prices are expected to ease. "The main driver of easing gold prices in the longer term will be greater risk-on sentiment as the global economy recovers in the later part of the decade," BMI said in its report. Gold prices will average $3,340 per ounce during 2025-2029, compared with $1,393 per ounce in 2019.

 

However, BMI said, "We see a number of upside and downside risks to our current forecasts for gold prices." On the upside, a greater than expected pickup in inflation due to tariffs could see a sharp rise in gold demand. Weakness in the US labour market, or if geopolitical tensions worsen, such as no ceasefire with Russia or escalating conflicts in West Asia, and the Russia-Ukraine war. Any major hit to global growth or surge in uncertainty would drive investors toward safe-haven assets like gold, boosting its price.

 

"On the downside is a sharp rise in the US dollar and bond yields in case the Fed takes a U-turn from its cutting cycle. This would significantly reduce gold's appeal, causing a sell-off and bringing prices back to USD2,500/oz levels," it said.  End

 

US$1 = INR 89.92

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Reshma Ravi

Edited by Ashish Shirke

 

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