As the world awaits the unveiling of the 2026 budget, the gold market is buzzing with anticipation. Gold prices have surged nearly 74% in 2025, fueled by geopolitical tensions, a weaker US dollar, and strong central bank purchases. With the budget announcement imminent, the question on every investor's mind is: What lies ahead for gold?
To shed light on this crucial question, we turn to economist Anand Srinivasan, who offers a nuanced perspective on the factors influencing gold prices. Srinivasan's analysis considers the interplay of global economics, currency fluctuations, and the actions of central banks.
Budget Impact: Customs Duty Cuts
One of the key factors to watch in the upcoming budget is any potential change in customs duty on gold and silver. According to reports, if the government decides to cut customs duty, gold prices in India could witness a decline. However, it's important to note that the impact of such a move might be short-lived, as global market trends exert a significant influence on precious metal prices.
Global Economic Factors
Srinivasan highlights the importance of understanding the relationship between money supply, interest rates, and gold prices. When governments print more money without a corresponding increase in gold reserves, the value of the dollar tends to decrease, leading to higher gold prices. Conversely, raising interest rates can decrease money circulation, strengthen the dollar, and potentially lead to a fall in gold prices.
Several factors could support continued high gold prices. Geopolitical and economic uncertainty, coupled with a weaker US dollar, have historically been positive drivers for gold, enhancing its appeal as a safe-haven asset. Moreover, rising government debt levels and fears of fiscal dominance could further bolster gold's position as a pseudo-currency.
Expert Forecasts and Predictions
Looking ahead, several institutions have offered their forecasts for gold prices. J.P. Morgan Global Research expects gold demand to push prices towards $5,000/oz by the end of 2026, averaging $5,055/oz in the final quarter. They project a further rise to $5,400/oz by the end of 2027. Goldman Sachs has also revised its year-end gold price forecast to $5,400 per ounce, citing growing appeal among private-sector investors and continued strong purchases from central banks.
However, not all forecasts are uniformly bullish. The World Gold Council suggests that in a scenario of a softer US labor market and easing monetary policy, gold could rise by 5%–15% in 2026. Conversely, if risk appetite increases and economic uncertainty diminishes, gold prices could face downward pressure.
Considerations for Indian Investors
Srinivasan also emphasizes the importance of the Indian Rupee's exchange rate against the dollar. A depreciating rupee could buffer against substantial gold price declines within India, even if international prices waver.
Potential Downside Risks
Despite the generally positive outlook, some downside risks remain. Goldman Sachs cautioned that a sharp reduction in perceived risks around the long-run path for global monetary policy could negatively impact gold prices.
The Bottom Line
The future trajectory of gold prices after the 2026 budget remains subject to various factors, including government policies, global economic conditions, and investor sentiment. While forecasts generally point towards continued strength in gold prices, investors should remain vigilant and consider the potential downside risks. Economist Anand Srinivasan's insights provide a valuable framework for understanding the complexities of the gold market and making informed investment decisions.
