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Protest Home / Markets / Commodities / Gold looks beyond war as inflation, monetary policy steer prices: ReportGold
looks beyond war as inflation, monetary policy steer prices: ReportMOFSL said gold's response to conflicts is
increasingly tied to their impact on inflation, real yields and monetary policy, with central-bank buying and ETF flows
supporting the long-term outlookGold started the year strongly, supported by policy uncertainty, ETF inflows,
central-bank buying and expectations of interest rate cuts by the US Federal Reserve | Image: Adobe StockPress Trust of
India New Delhi 3 min read Last Updated : Aug 10 2026 | 10:39 AM ISTListen to This Article Gold's traditional
relationship with geopolitical conflicts is changing, with inflation, interest rates and monetary policy emerging more
important drivers of bullion prices, according to a report. In its H1 2026 Precious Metals Report, Motilal Oswal
Financial Services Ltd (MOFSL) said the first half of the year showed that geopolitical risks alone may not be enough to
sustain a gold rally as investors increasingly assessed conflicts through their impact on inflation and interest rates.
"H1 2026 demonstrated that the relationship between war and gold has become increasingly conditional," Navneet
Damani, Head of Research, Commodities at MOFSL, said. Markets increasingly focused less on the geopolitical headlines
themselves and more on their impact on inflation, real interest rates and monetary policy expectations, he added.
"Rising bond yields emerged as the key headwind for gold, outweighing traditional safe-haven demand despite
elevated geopolitical tensions," Damani said.Also Read Gold rises ₹85 on MCX, silver jumps ₹2,033 on soft US
inflation dataGold, silver likely to extend gains as inflation, West Asia risks loomGold rises ₹497 on MCX, silver
jumps ₹2,157 amid geopolitical tensionsBullion exchange CEO Ashok Gautam resigns as platform struggles to growTitan,
Hind Zinc: Angel One decodes charts of Gold-, Silver-related stocks Gold started the year strongly, supported by policy
uncertainty, ETF inflows, central-bank buying and expectations of interest rate cuts by the US Federal Reserve. However,
the market narrative shifted as tariffs began feeding into production costs and inflation expectations, lifting the
prospect of higher-for-longer interest rates and pushing real Treasury yields and the dollar higher, according to the
report. It also highlighted that the US-Iran conflict provided another example of the changing dynamic. The initial
escalation supported bullion demand, higher oil prices raised inflation concerns and reduced expectations of monetary
policy easing, limiting gains in gold and contributing to a correction. "Tariffs have evolved from a growth risk
into an inflationary force," the report said. Looking ahead, the report expects inflation trends, Federal Reserve
communication and global liquidity to remain key drivers of gold and silver, alongside central bank buying, exchange
traded funds (ETFs) flows and speculative positioning. "Inflation trajectory, Fed communication, global liquidity
conditions, central bank demand and investment flows are expected to remain the key variables for gold and silver during
H2 2026. "While near-term volatility may persist, structural demand continues to support the long-term outlook for
precious metals," Manav Modi, Commodities Analyst at MOFSL, said. China will remain an important variable through
reserve diversification, central bank purchases and sustained industrial demand, particularly for silver. Gradual policy
normalisation by the Bank of Japan could, however, tighten global liquidity, the report noted. MOFSL expects gold to
retain medium-term strength but sees scope for a 6-8 per cent correction from current levels before a potential move
towards USD 4,800 per ounce in the overseas markets and subsequently more than USD 5,500 over 12-15 months horizon. On
the domestic front, the report identifies accumulation levels assuming a USD/INR rate of 95.5, with medium-term targets
of Rs 1.68 lakh per 10 grams followed by Rs 1.93 lakh per 10 grams. The report further stated that gold may remain
range-bound or correct further until interest rates decline. However, central bank demand, fiscal risks and
currency-debasement concerns support the long-term outlook.(Only the headline and picture of this report may have been
reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)More From
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reopeningTopics : Gold Gold Prices bullionDon't miss the most important news and views of the day. Get them on our
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