Gold Rises 3% as Experts Split on Rally’s Sustainability in Coming Months

Gold’s Next Move Hinges on Yields, Inflation and Demand

A sharp gain has revived optimism, but analysts disagree on whether it signals a lasting recovery or a brief rebound.

A powerful rebound, but no agreement on its durability

Gold’s nearly 3% rise has put the metal back in focus after a sluggish period, with the latest US midterm election results favouring Democrats over the Republicans led by President Donald Trump. Analysts see scope for a near-term recovery, but the central question is whether buyers are returning for the longer term or traders are simply covering short positions.

Manav Modi of Motilal Oswal Financial Services attributes support to weakness in the US dollar index and Treasury yields. When those indicators soften, gold can become more attractive relative to dollar-linked alternatives and yield-bearing assets. That provides a plausible explanation for the latest advance, but it does not by itself establish that the move will persist.

Price targets reveal the market’s uncertainty

Modi expects international prices to move towards $4,200 an ounce in the near term, with a medium-term target of $4,500–$4,700. In domestic terms, those levels correspond to about ₹148,000 and ₹1,60,000–₹1,68,000 per 10 grams, respectively. He identifies recent lows of $3,800–$3,900, or ₹135,000–₹138,000, as potential accumulation levels.

PL Capital’s Ashish Rajodiya takes a more cautious view, describing the rise as a temporary relief rally driven largely by short covering. He sees possible resistance around ₹148,000–₹149,000 per 10 grams and says prices could return towards ₹130,000. The gap between these views is a reminder that targets are analyst scenarios, not assured outcomes.

Inflation and interest rates remain key tests

Rajodiya’s caution centres on the inflation and interest-rate outlook: he believes gold could remain under pressure until inflation eases meaningfully and rates begin to move lower. That makes the recent weakness in the dollar and Treasury yields important, but investors will need to see whether those conditions endure. A renewed move in the opposite direction could challenge the recovery.

For Indian buyers, the quoted domestic price also gives the rally a direct local reference point. The analyst forecasts suggest that the area near ₹148,000–₹149,000 may become a test of the move’s strength, while the lower levels cited by both analysts mark zones they believe could matter if prices retreat. Neither set of levels removes the risk of volatility.

Jewellery demand adds a domestic counterpoint

There are also signs of improvement in physical demand. Yogesh Singhal of the All Bullion and Jewellers Association said jewellery demand had recovered sharply over the past month after a sluggish first nine months of the year. Diwali sales were good, and the coming wedding season could help jewellers recover some earlier losses if the momentum continues.

Singhal said jewellery purchases have held steady in value terms despite lower sales by weight, as prices are higher than a year ago. That distinction matters: stable spending does not necessarily mean consumers are buying the same quantity of gold. Still, sustained festive and wedding-season demand would offer support to the domestic trade even as global price direction remains uncertain.

Key Highlights

• International gold ended 2.9% higher at $4,042.2 an ounce; Indian prices were ₹141,055 per 10 grams.
• A weaker US dollar index and Treasury yields are cited as near-term support.
• One analyst sees potential upside to $4,200 near term and $4,500–$4,700 over the medium term.
• A more cautious view treats the rise as short-covering and flags ₹148,000–₹149,000 as a possible resistance area.
• Jewellery demand has improved, though sales by weight remain lower even as spending value has held steady.

Investor Note: The competing forecasts underline the risk of treating a sharp one-day rise as confirmation of a sustained trend. Investors may want to weigh price levels alongside the direction of the dollar, yields, inflation and physical demand, while recognising that the outlook remains uncertain.