Motilal Oswal says gold rally deferred, not derailed; advises buying in small lots on dips

Motilal Oswal Financial Services has released a new report on gold titled "Gold's Rally: Deferred, Not Derailed". The report says there may be some trouble in the near term, but gold remains strong for the long term. If prices fall, investors should buy in small lots instead of selling in panic, it says.

Gold surprised everyone last year. In 2026, however, both gold and silver have seen sharp swings. In January 2026, gold reached a record $5,600 an ounce, and it seemed the rally could not be stopped. Prices then fell suddenly to below $4,000, followed by a modest recovery.

Silver moved even faster. It had crossed $100, but later fell at a faster pace than gold. The rupee has also swung against the dollar, which has affected domestic prices. Gold kept climbing through 2025, while in 2026 it has been moving up and down. The reasons include the question of US interest rates, still-high inflation, higher bond returns and conflict around the world.

Diwali and Dhanteras are major occasions for buying gold and silver in India, and the wedding season also falls at this time, so demand rises. On Diwali in 2016, gold was at Rs 30,000. On Diwali in 2026 it has reached about Rs 1.50 lakh, a fivefold rise in 10 years. Data show that gold has returned more in the 30 days before Diwali than in the 30 days after. In the month before Diwali last year, gold rose 20% and silver 38%.

Despite high prices, people's faith in gold has not weakened. In August and September, global gold ETFs added 187 tonnes of gold, taking total holdings to 4,256 tonnes, the highest ever. In India, gold ETFs received Rs 44.5 billion in September, 71% more than the previous month. Silver ETFs also received Rs 19.7 billion. On the other hand, India's gold imports fell, from $2.3 billion in August to $1.8 billion in September. The reasons given are high prices and some restrictions the government has placed on imports.

Navneet Damani, head of research at Motilal Oswal, said: "With so much uncertainty in the world, gold is a safe place. But what prices will do in the near term depends on the US Federal Reserve, inflation, the dollar and bonds. In September, the US raised interest rates by 25 points to 3.75 to 4.00%, which has brought some pressure. Even so, central banks are buying gold, so there is support in the long term." According to analyst Manav Modi, silver may offer higher returns, but it also carries higher risk. He said the fall in gold is a buying opportunity.

According to the report, the $3,800 to $3,900 range in the international market is good for buying. In the near term gold could reach $4,200, and in the medium term $4,500 to $4,700. For domestic prices, assuming a dollar at Rs 96, the Rs 1,35,000 level is considered good for buying. In the near term gold could reach Rs 1,48,000, and in the medium term Rs 1,60,000 to Rs 1,68,000. The report advises against chasing the rally and says to buy gold calmly in small lots when prices fall. Gold is for protecting money, not for getting rich, it says, so keep some gold in the portfolio at all times.