Summary of this article
OCBC downgraded its 2026 gold target to $4,360.
Hawkish Fed policies and a stronger dollar drove corrections.
Experts recommend staggered buying via gold ETFs or funds.
Singapore-based banking giant Oversea-Chinese Banking Corporation (OCBC) has revised its long-term targets for precious metals amid changing global macroeconomic conditions. The bank has lowered its 2026-end (2026E) forecast for gold to USD 4,360 per troy ounce from an earlier projection of USD 5,100 per troy ounce.
Silver also faced a downgrade, with its target dropped to USD 67 per troy ounce from USD 89.50 per troy ounce. Presently, gold is trading around USD 4,082.20 per troy ounce, the new projection hints at an upside of nearly 7 per cent.
Gold Retreats From Historic Peaks
The re-rating of the target by OCBC comes at a time when the yellow metal is retracing from its historic highs. Gold hit record-high levels earlier in 2026 as the price of 24 karat physical gold surged to Rs 1,93,096 per 10 grams. However, the price has corrected by nearly 25 per cent as of July 2, trading around Rs 1,43,340 per 10 grams. MCX Gold has also corrected significantly. Gold Futures with August 5, 2026 expiry traded lower by nearly 30 per cent compared to the all-time high of Rs 2,04,375 per 10 grams.
The downward pressure on the yellow metal is driven by a repricing of real interest rates and a resurgent US dollar. A hawkish stance by the Federal Reserve, along with strong US jobs data, reduced the appeal of non-yielding assets like gold. The de-escalation in the US-Iran conflict has also drained the safe-haven demand for the asset globally.
Closer home, a customs duty hike on gold added to the headwinds and dampened consumer appetite, ultimately leading to a drop in physical demand.
According to the Indian Bullion Jewellers Association, Indian households have liquidated nearly 50 tonnes of old gold jewellery during the April to June quarter amid fears of a price crash toward the Rs 1,20,000 per 10-gram mark.
How Should Investors View The Drop In Prices
Anindya Banerjee, Head of Currency and Commodity Research, Kotak Securities, told Outlook Money that despite the drop in gold and silver prices, the underlying reasons for their rally remain intact. He mentioned that the underlying reasons which led to gold’s rally include de-dollarisation, de-globalisation and a historic reset of the global reserve currency. He added that, given this macroeconomic shift, even sharp corrections like the ones seen in 2026 are consolidations within a long-term shift.
“One must first understand why gold and silver have rallied at all — the structural theme remains fully intact. De-dollarisation: the world is moving rapidly from a unipolar, dollar-led world order towards a multipolar order in which the dollar will be one of several important currencies rather than the single reserve currency. Second, gold sits right at the top of the global monetary order. Resets of the global reserve currency have historically occurred roughly once every hundred years, and gold has always been the currency through which that transition takes place, with central banks selling the incumbent reserve currency and accumulating gold through direct and indirect means. Third, de-dollarisation is feeding de-globalisation and de-carbonisation, and all three are interlinked. We expect this transition to run till 2030–32. Corrections along the way, however sharp, are consolidations within that larger journey,” Banerjee said.
Banerjee added that investors are looking to buy the dip and accumulate more gold in their portfolio. They can do so as long as prices remain above USD 3,900. However, he cautioned that a move below the USD 3900 mark would signal a negative development.
“As long as USD 3,900 is respected, the possibility of a near-term bottom stays intact, and we remain bullish, expecting a gradual up-move within a broad USD 3,900–4,400 consolidation zone, roughly Rs 1,38,000 to Rs 1,56,000–1,58,000 per 10 grams on MCX. Only a sustained move above USD 4,400–4,500 would signal that a new bull run has begun; only a sustained break below USD 3,900 would be a negative development, opening USD 3,600–3,650, which corresponds to around Rs 1,27,000–1,28,000 on MCX,” Banerjee said.
Banerjee urged investors who are considering taking a fresh entry to do so via a staggered entry, not a lump sum.
“For retail investors, this argues for staggered entry, never lump sum: a first tranche in gold can be considered near Rs 1,38,000 per 10 grams, with the discipline to pause if USD 3,900 gives way and re-enter near Rs 1,27,000–1,28,000. In silver, Rs 2,13,000–2,16,000 per kg (around USD 55–56) is the accumulation zone, with a stop-and-review if USD 55 breaks,” Banerjee said.
Banerjee urged existing investors who invested in gold as it neared its peak to not sell their holdings, as it would compound their losses.
“Investors who bought near the highs should not compound the error by selling the lows. This correction has been driven by a hawkish repricing of interest rates, and that driver is now maturing: with commodities down sharply over the past month, the inflation impulse is fading, and growth momentum should also cool once the FIFA World Cup in the US winds down. We do not expect the Fed to go on a hawkish rampage,” Banerjee said.
He advised investors to hold their gold holdings with a 3-5 year horizon and restrict precious metals to 10 to 15 per cent of their total portfolio, trimming holdings only if MCX Gold declines towards the Rs 1,56,000–1,58,000 mark.
“So our advice is: hold with a three-to-five-year horizon, keep precious metals at 10–15 per cent of the portfolio, trim only on bounces — toward Rs 1,56,000–1,58,000 on MCX gold — if the allocation has swollen beyond that, and average down only in staggered tranches at the levels identified,” Banerjee said.
Banerjee suggests that gold ETFs and gold mutual funds remain the most practical route for seeking exposure to the yellow metal.
“For fresh deployment today, gold ETFs and gold mutual funds are the most practical route. Physical gold is best reserved for consumption — jewellery for weddings and occasions — since 3 per cent GST, making charges and purity and storage concerns make it inefficient purely as an investment,” Banerjee said.
