Mumbai: Gold has entered a structural repricing phase, supported by weakening trust in global monetary systems, rising geopolitical tensions, tightening physical supply, and a clear shift in how countries manage their reserves, according to the latest Precious Metals Quarterly Report by Motilal Oswal Financial Services Limited.

Gold prices crossed the USD 5,000 per ounce mark in early 2026, marking one of the strongest long-term bull phases in modern history. The report highlights that this rise is not driven by a single event, but by several long-term forces coming together and reshaping the global financial landscape.

Historical Context and Real Rates: A Structural Shift

Historically, gold has performed best when confidence in monetary systems weakens and governments face rising fiscal pressure, rather than during routine economic slowdowns. While gold has traditionally moved in the opposite direction of real interest rates, the report notes that the sustainability of real returns now matters more than their headline levels.

Even during periods of positive real interest rates between 2023 and 2025, gold prices continued to rise. This reflects growing investor concerns about rising global debt levels and increasing political pressure on central banks, which have raised doubts about the long-term stability of fiscal and monetary systems.

Manav Modi, Commodities Analyst, Motilal Oswal Financial Services Ltd, said: “Gold’s strength despite positive real interest rates shows a clear shift in investor thinking. Real returns are increasingly seen as temporary and policy-driven, which reduces the cost of holding gold and strengthens its role as a safeguard against broader financial risks.”

Geopolitical Tensions and Trade Uncertainty Support Gold

The report highlights that rising geopolitical tensions across regions such as Eastern Europe, the Middle East, the Arctic, and parts of Asia have kept global uncertainty elevated. Alongside this, renewed trade tensions and tariff-related disruptions have led to higher inflation volatility, currency uncertainty, and pressure on global supply chains—conditions that have traditionally supported gold demand.

Tariff-related inflation pressures, combined with signs of slower economic growth, have further strengthened gold’s appeal as a safe and neutral asset during uncertain times.

Monetary Policy, Political Pressure and Trust in Central Banks

According to the report, expectations of monetary easing and increasing political pressure on central banks have added long-term support to gold prices. Rising debt-servicing costs and fiscal constraints have made it difficult for policymakers to keep interest rates meaningfully high for extended periods.

As confidence in traditional “risk-free” assets weakens, gold has gained importance as non-sovereign money—an asset that sits outside politically influenced financial systems.

Navneet Damani, Head of Research – Commodities, Motilal Oswal Financial Services Ltd, said: “Gold is increasingly being seen as a long-term reserve asset rather than just a short-term hedge. As fiscal stress increases and questions are raised around monetary independence, gold’s role as non-sovereign money has become more important, leading to a structural shift in demand.”

Tight Physical Supply and Limited Availability

The report also points to tightening physical market conditions. Growth in global mine supply remains limited, while inventories across major exchanges have declined, reducing the availability of immediately deliverable gold. Long development timelines for new mines and rising production costs have further limited supply, helping prices remain resilient even during market volatility.

Rupee Depreciation and Strong Retail Demand

Currency depreciation has acted as a key driver of gold demand across emerging markets, especially in India. Rising local gold prices have reinforced gold’s role as a trusted store of value for households and retail investors. At the same time, investor participation through exchange-traded funds has recovered after several years of outflows.

Gold ETFs have seen renewed interest, with India emerging as a key long-term growth market, expanding gold demand beyond traditional buying patterns.

Central Banks Continue to Support Gold Demand

Central banks have remained the most consistent buyers of gold, with net purchases of around 1,000 tonnes per year for four consecutive years. The report notes that this buying has moved beyond short-term accumulation and has become a formal part of reserve management, driven by concerns around sanctions risk, reserve safety, and dependence on dollar-based assets.

This steady demand from central banks has created a strong support base for gold prices and reduced downside volatility.

Long-Term Outlook and Price Framework

Motilal Oswal Financial Services Limited expects gold to remain well supported over the long term, as reserve diversification, limited supply growth, and ongoing global uncertainty continue to influence investment behaviour.

Commenting on the outlook, Navneet Damani, Head of Research – Commodities, along with Manav Modi, Commodities Analyst at Motilal Oswal Financial Services Ltd, said: “The long-term outlook for gold remains positive. As global reserves gradually diversify away from dollar-centric assets and physical supply remains constrained, gold prices are likely to stay supported around and above USD 5,000 per ounce. This cycle is being driven not just by inflation, but by confidence in fiscal and monetary systems.”

The report concludes that gold’s current rally reflects a structural repricing in a changing global system, positioning the metal as a core asset for investors amid rising uncertainty and long-term shifts in the global financial order.