Will Gold Price Hit Rs 200,000 in 2026?

The financial history of 2025 will feature gold prominently. The yellow metal has defied the expectations of all naysayers and precious metal bears in the world.

From levels of around Rs 78,500 per 10 gm at the start of 2025, the gold price ended the year up 73% at Rs 136,000 per 10 gm.

And then, the price kept rising to 145,000 per 10 gm at the time of writing. Any one who predicted an end to the gold bull market has been repeatedly proven wrong.

It's no wonder that there is talk about the '2 lakh' gold price among investors and traders alike.

To put the yellow metal's returns in a long-term perspective, the price of gold has doubled since mid-August 2024, i.e. in one year and five months.

In fact, the price has almost tripled since October 2022, i.e. in two years and 3 months and has quadrupled since July 2019, i.e. in five and a half years.

These are the kind of gains that would satisfy even stock market investors.

Just look at the long term chart of gold. You would wish the prices of the stocks in your portfolio had charts like this.

Gold Price (Rs) - 5 Years

Can the Gold Price Hit Rs 200,000 in 2026?

Yes, it's possible. The gold price needs to move up about 37% in a little over 11 months.

Sentiment in the market is extremely bullish on gold right now so we wouldn't be surprised at all if the 2 lakh mark was hit this year.

In fact, the sentiment is so strong, that some investors are considering selling stocks and buying gold.

However, this is not the right way to go about investing in gold. Consider gold as a long-term investment, a portfolio diversifier, a hedge against inflation, but not as a speculative asset.

What are the risks?

Will the gold price continue to rise or will it finally decline this year?

We believe investors should carefully watch out for any potential changes to the underlying factors that are driving up the yellow metal.

If these factors were to change, the uptrend in the price could run out of steam.

So, what are these factors?

• Trade wars

• Inflation

• US recession fears

In a nutshell, the US President Donald Trump's tariffs has raised the yellow metal's safe-haven appeal.

Gold has always been a safe haven asset. People flock to gold either when times are tough or when there is uncertainty in financial markets.

When Trump followed through on his election promise to impose tariffs, financial markets had to factor in the risks of trade wars and the uncertainty caused by trade talks with the US.

In the case of India, this uncertainty remains because the talks haven't concluded and a trade deal with the US hasn't been finalised.

Even though the US has signed trade deals with many countries, markets are concerned about the fallout of tariffs, i.e. their second and third order effects.

These concerns also expressed in the context of a slowing US economy, possibly tipping into a recession, if the fallout is not managed properly.

Market uncertainty and heightened risk aversion has historically been positive for gold prices.

And then there is inflation. With imports to the US more expensive that before, inflation is a big risk.

If the risks posed by these factors were to calm down as the year progresses, then the market uncertainty will also reduce. This will be negative for the gold price.

Thus, gold investors who are looking out for Rs 200,000 per 10 gm, will need to closely track inflation trends, trade tensions, and the performance of the US economy along with the gold price.

Conclusion

At Equitymaster, we believe in having 5-10% of one's portfolio in gold at all times.

However, investors should not see gold as a potential substitute for any other asset, especially stocks.

It makes sense to hold some precious metals in one's long-term portfolio, but it doesn't make sense to speculate on short term price movements.

While considering an investment in gold, have a time horizon well beyond 2026 and always do your due diligence.

Happy investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...