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AFTER A STELLAR PERFORMANCE IN 2025, WHAT NEXT FOR GOLD?

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– By Shri. V.P. Nandakumar (Chairman & MD, Manappuram Finance Ltd)

Gold had a blockbuster year in 2025, delivering returns in the range of 70–75% in rupee terms and setting multiple all‑time highs in both international and domestic markets. The rise in price far outpaced what most analysts had pencilled in a year earlier. As investors look ahead to 2026, the balance of strong safe‑haven demand, central‑bank buying and a broadly bullish commodities backdrop suggests further gains are likely, albeit at a more moderate pace than in 2025.

2025: A Year That Surprised Everyone

Most analysts entered 2025 expecting a good year for gold, but few anticipated the scale of the rally that eventually unfolded. Forecasts published in late 2024 typically clustered between 2,300 and 2,700 dollars an ounce for 2025, with even bullish scenarios stopping short of the levels ultimately reached. After all, gold went on to surge past 4,000 dollars an ounce at its October peak, with domestic prices in India approaching  ₹1.4 lakh per 10 grams as the year drew to a close.

For Indian investors, this translated into calendar‑year returns of roughly 70–75%, making gold one of the best‑performing mainstream asset classes of 2025. The magnitude of the move was such that even long‑time gold bulls were forced to revise up their targets as the year progressed.

Why the Meteoric Rise

Two structural forces were central to gold’s stellar performance: sustained central‑bank accumulation and easy global liquidity conditions, particularly in the United States. A recent analysis of official‑sector activity shows that annual central‑bank net purchases averaged about 473 tonnes between 2010 and 2021, then jumped to 1,136 tonnes in 2022, 1,051 tonnes in 2023 and 1,045 tonnes in 2024, with 2025 recording 950 tonnes of purchases. This extraordinary appetite reflects a desire among many reserve managers to diversify away from the US dollar at a time of heightened geopolitical risk and concerns about the long‑term sustainability of developed‑market fiscal positions.

India’s own central bank has been an active participant in this trend. The Reserve Bank of India’s gold reserves rose to about 880 tonnes by the third quarter of 2025, up significantly from earlier years, and a larger proportion of these holdings is now kept domestically rather than overseas. These additions underscore gold’s growing role in India’s external balance‑sheet resilience and send a powerful signal to domestic investors about the metal’s strategic importance.

On the macro side, persistently loose fiscal and monetary policy in the United States has been a powerful tailwind. Large fiscal deficits, rising public debt and a stop‑start approach to tightening have kept real interest rates contained and revived fears of long‑term dollar debasement. With markets increasingly pricing in further rate cuts into 2026, non‑yielding assets such as gold have benefited from a lower opportunity cost of carry.

The Broader Commodities Boom

Gold’s outperformance in 2025 did not occur in isolation; it was part of a broader upswing across the commodities complex. Silver, the traditional high‑beta counterpart to gold, almost tripled in domestic terms, with some estimates placing its annual gain at around 150–170%, supported by both safe‑haven flows and surging industrial demand from sectors such as electronics, solar and electric vehicles.

Base metals also joined the party. Copper prices on Indian exchanges delivered returns of more than 60% in 2025, while aluminium and other industrial metals posted strong double‑digit gains on the back of tightening supply, energy‑transition investment and restocking in key manufacturing hubs. This synchronous rally across precious and base metals suggests that investors were not only seeking safety, but also positioning for a new capex cycle and a world increasingly constrained by resource bottlenecks.

2026 Outlook: Tailwinds, Headwinds, and Forecasts

Looking ahead, consensus projections still point to upside for gold, but from a much higher base and with greater dispersion in views. Major investment banks now see gold averaging somewhere in the mid‑4,000s per ounce in 2026, with some calling for targets as high as 4,900–5,000 dollars under benign conditions that do not assume a full‑blown crisis.

On the tailwind side, three factors stand out:
* Ongoing central‑bank demand, particularly from emerging markets seeking to diversify reserves.
* Expectations of further monetary easing in advanced economies, which would keep real yields low and support non‑yielding assets.
* Elevated geopolitical tensions and “fragmentation risk”, which sustain safe‑haven flows into gold and other real assets.
* Set against these are some potential headwinds. A sharper‑than‑expected slowdown in global growth could dampen jewellery and industrial demand, especially in Asia. A strong rebound in the US dollar, perhaps triggered by a more hawkish Federal Reserve path, could also cap dollar‑denominated gold prices even if local‑currency prices remain firm in emerging markets. Finally, after the extraordinary gains of 2025, there is always the risk of intermittent profit‑taking as leveraged players rebalance portfolios.

Taken together, these forces argue for a more measured performance in 2026: gold is unlikely to repeat the fireworks of the previous year, but the fundamental backdrop still appears supportive of an upward drift rather than a reversal. The fact that silver, copper and aluminium have all outpaced gold in percentage‑return terms reinforces the view that a broader commodities cycle is under way, with gold acting as both anchor and barometer of investor sentiment.

Where Might Gold Be by End‑2026?

Forecasting precise price levels is always hazardous, more so after a year as exceptional as 2025. Nonetheless, looking at the prevailing central‑bank buying patterns, projected interest‑rate cuts and the continued churn in global geopolitics, it is reasonable to expect gold to finish 2026 modestly higher than current levels rather than meaningfully lower. Many institutional forecasts cluster around a further 10–15% upside over a two‑year horizon, implying that by December 2026, international prices could be broadly in line with the 4,500–4,900‑dollar‑per‑ounce range, with domestic prices in India adjusting accordingly based on currency movements and local demand.

A December 2025 commodities outlook note from Goldman Sachs forecasts gold at 4,900 dollars per ounce by the end of 2026, supported by strong central‑bank demand and expected US Federal Reserve rate cuts. JP Morgan’s late‑2025 outlook calls for gold to average about 5,055 dollars per ounce in the fourth quarter of 2026, one of the more optimistic projections among major banks. The bank cites persistent central‑bank purchases (around 566 tonnes per quarter) and a Fed easing cycle, alongside worries about stagflation and currency debasement, as key supports for this higher path.

For investors and policy‑makers alike, the key message is that gold’s role as a strategic hedge has been reaffirmed, not diminished, by its recent outperformance. Central‑bank purchases, including those of the Reserve Bank of India, underline the metal’s importance as a reserve asset, while households have been reminded once again of its ability to protect real wealth in an era of loose monetary and fiscal policies aggravated by geopolitical flux. The most prudent base case, therefore, is for a continued, moderate appreciation in gold over 2026, with volatility along the way but with its safe‑haven status firmly intact.

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Dutch Court to Decide Control Battle Between Nexperia and Wingtech

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Dutch chipmaker Nexperia faces a public court battle in Amsterdam as European managers challenge its Chinese owner Wingtech over company control. The dispute has contributed to a shortage of chips used by car manufacturers and escalated last September when the Dutch government temporarily seized control of Nexperia over fears of transferring operations and intellectual property to China. The seizure was later revoked to ease tensions with Beijing.

Nexperia produces silicon wafers in Europe, which are shipped to China for cutting and packaging. In October, the Amsterdam Enterprise Court suspended Wingtech founder Zhang Xuezheng as Nexperia CEO and stripped Wingtech of control over the shares, citing concerns about mismanagement and potential conflicts of interest due to Zhang’s ownership of a Shanghai factory selling wafers to Nexperia. The current hearing will determine whether a full investigation into alleged mismanagement should proceed or if previous rulings should be reversed.

Wingtech is expected to argue that Zhang’s plans were in line with Chinese market opportunities, highlighting significant sales and growth prospects in China. Meanwhile, Nexperia has split operations between Europe and China, stopped shipments to China due to nonpayment, and is investing $300 million in Malaysia to serve non-Chinese customers. The Dongguan subsidiary has rebranded as “Nexperia China” and plans to replace European production with Chinese alternatives, including output from Zhang’s WingSkySemi plant.

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Paris Farm Show to Go Cow-Free for First Time Amid Disease Concerns

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For the first time in its history, Europe’s largest agricultural exhibition in Paris will take place without cows after an outbreak of lumpy skin disease in France raised fears of contamination. Organisers of the International Agriculture Show said the decision was taken to prevent any risk of spreading the disease, which has affected more than 100 herds across the country. The annual event usually features 500 to 600 cattle and attracts around 600,000 visitors.

Calling it a “historic” and painful decision, SIA Chairman Jerome Despey said the absence of cattle was unavoidable despite the emotional and symbolic importance of cows to the show. He noted that the exhibition would still feature other animals such as pigs, sheep, horses, dogs and cats. Lumpy skin disease, which is mainly transmitted by biting insects, causes fever, painful skin lumps and reduced milk production in cattle.

Although France’s farm ministry has said the disease is under control due to vaccination efforts, concerns among farmers remain high. Some have criticised the government’s policy of culling entire infected herds, a measure that has fueled recent farmer protests in Paris. While the main farmers’ union FNSEA supports the government’s approach, organisers said they hope demonstrations will not disrupt the show, which is regularly attended by senior political leaders. The traditional cow mascot of the event will also be replaced by other animals this year.

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Germany’s Coalition Divided Over Inheritance Tax Reform Ahead of Key Elections

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Germany’s Social Democratic Party (SPD) has proposed sweeping changes to inheritance tax rules, setting up a fresh dispute with its conservative coalition partner. The reforms aim to make the system fairer by increasing taxes on large estates while easing the burden on smaller inheritances, just as the government faces several important regional elections this year.

While both the SPD and Chancellor Friedrich Merz’s conservative bloc agree on the need for tax relief to revive the weak economy, they strongly disagree on how to achieve it. The disagreement adds to growing tensions within the coalition, reinforcing public perceptions of a divided and slow-moving government at a time when voters are demanding clear economic direction.

Under the SPD plan, heirs would be able to inherit up to around one million euros tax-free, and family homes would remain exempt if the heir continues to live there. Family businesses would receive allowances of about five million euros, but larger firms would face higher taxes — a move strongly opposed by conservatives, who warn it could hurt Germany’s small and medium-sized companies.

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Hungary’s nationalist Prime Minister Viktor Orban will face his strongest electoral challenge in 16 years when the country holds parliamentary elections on April 12. The vote is being closely watched across Europe, as Orban has been a key figure among far-right leaders and maintains close ties with U.S. President Donald Trump and Russia despite the Ukraine war.

Orban, who has ruled since 2010, has reshaped Hungary into what he calls an “illiberal democracy,” often clashing with the European Union over media freedom, migration and LGBTQ rights. His Fidesz party is campaigning on stability and security, promising to keep Hungary out of the Ukraine conflict and stop illegal migration, while also trying to revive an economy hit by high inflation and a cost-of-living crisis.

Challenging him is Peter Magyar, a former government insider whose Tisza party has surged since entering politics in 2024. Recent polls show Magyar ahead among decided voters, as he campaigns on fighting corruption, restoring EU ties and unlocking frozen European funds to boost the economy. With many voters still undecided, the election outcome remains uncertain and could reshape Hungary’s role in Europe.

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Russia Probes Hospital Negligence After Nine Newborn Deaths in Siberia

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Russian authorities have launched a criminal investigation into the deaths of nine newborn babies at a maternity hospital in the Siberian city of Novokuznetsk, following suspicions of medical negligence. The country’s Investigative Committee said hospital staff are being questioned, medical records have been seized and forensic examinations are under way to establish the cause of the deaths.

The hospital said it had treated 32 infants in intensive care since December 1, including 17 in critical condition suffering from severe intrauterine infections. While it maintained that all newborns received treatment in line with clinical guidelines, it confirmed that nine babies did not survive. Four infants remain in intensive care, while another four have been transferred to a different medical facility.

The case has sparked widespread public outrage, with the governor of the Kuzbass region, Ilya Seredyuk, suspending the hospital’s chief doctor pending the investigation. The incident has triggered angry reactions on social media and renewed scrutiny of Russia’s healthcare system, especially as authorities seek to boost the country’s low birth rate. The hospital has since suspended new admissions, citing a surge in respiratory infections and the introduction of quarantine measures.

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Marine Le Pen’s Appeal on EU Funds Misuse Begins in Paris

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French far-right leader Marine Le Pen has begun a critical appeal in Paris that could determine her eligibility to run in the 2027 presidential election. She was banned from holding public office in March after being convicted, along with eight former National Rally (RN) lawmakers, of misappropriating over €4 million in European Union funds. The case stems from payments made to staff working for the party instead of the European Parliament between 2004 and 2016.

Le Pen maintains that her actions were legitimate and hopes to convince the new panel of judges of her innocence. She also appealed her initial sentence of four years’ imprisonment, with two years suspended and two under home detention, and a €100,000 fine. The appeal hearing, which also involves the RN and ten other co-defendants, is scheduled to conclude on February 12, with a ruling expected before summer.

If the five-year ban is upheld, Le Pen would be barred from contesting the 2027 election. In such a scenario, her protégé, 30-year-old RN party president Jordan Bardella, is expected to lead the party’s presidential bid. The European Parliament is seeking more than €3 million in damages, while the RN must also pay a €2 million fine, half of which has been suspended.

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G7 and Allies Explore Reducing Dependence on Chinese Rare Earths

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Finance ministers from the G7 countries, along with officials from Australia, Mexico, South Korea, and India, met in Washington on January 12 to discuss strategies for reducing dependence on Chinese rare earths. The meeting, convened by U.S. Treasury Secretary Scott Bessent, focused on securing alternative supply chains for critical minerals through measures such as price floors and new international partnerships. No joint statement was issued, but officials highlighted broad agreement on the urgency of diversifying sources.

Japanese Finance Minister Satsuki Katayama emphasized short-, medium-, and long-term approaches to strengthen non-Chinese rare earth supplies. Proposed measures include promoting labor and human rights standards in mineral sourcing, deploying financial incentives, trade and tariff tools, and minimum price settings. Countries participating in the discussions, along with the EU, represent 60% of global demand for critical minerals, which are vital for defense, semiconductors, renewable energy, and battery technologies.

German Finance Minister Lars Klingbeil and South Korean Finance Minister Koo Yun-cheol stressed the importance of proactive steps, including developing domestic supplies, recycling, and technology collaborations to create resilient supply chains. While participants warned against forming an anti-China coalition, they agreed on the need for urgent action to secure critical minerals and reduce vulnerability to export restrictions, particularly amid China’s recent curbs on materials destined for Japan’s military.

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Spain Moves to Cap Room Rents and Curb Seasonal Leases to Tackle Housing Crisis

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Spain’s government will introduce tougher rental rules in the coming weeks, including caps on room rents and stricter limits on seasonal leases, as it tries to rein in soaring housing costs. Prime Minister Pedro Sánchez said the new decree will deepen state intervention in the rental market, which has come under strain from a severe housing shortage and a booming tourism sector.

The plan includes a 100% income tax rebate for landlords who renew leases without increasing rents, alongside rent controls in areas classified as under heavy pressure. It will also limit the total rent charged for individual rooms so it cannot exceed the price of renting a whole apartment, a move aimed at stopping landlords from inflating prices through shared housing.

Seasonal rental contracts will face tighter conditions and penalties if they are used to replace long-term leases, a practice critics say worsens housing insecurity. While regions will be responsible for enforcing most of the measures, some, such as Catalonia and major cities like Madrid, have already begun imposing similar limits as Spain grapples with a housing deficit estimated at about half a million homes.

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French farmers intensified their protests on Monday by stopping trucks and checking imported food at key transport hubs, including the country’s largest container port at Le Havre and on a major motorway north of Paris. The actions were aimed at opposing the EU-Mercosur free-trade deal, which farmers say would expose them to unfair competition from cheaper agricultural products imported from South America and beyond.

The pressure has grown since most European Union member states approved the deal last week, despite France voting against it. Farmers’ unions argue that imported goods often do not meet the same environmental, health and labour standards required of European producers, making it difficult for them to compete on price. Protesters at Le Havre said they had already spotted products such as mushrooms and sheep offal from China entering the supply chain.

Protests also spread to other parts of the country, with farmers blocking fuel depots, ports and transport routes in regions including La Rochelle, Bayonne and the French Alps. Unions plan to bring tractors into Paris for a major demonstration, followed by another rally in Strasbourg later this month, as they seek to persuade the European Parliament to reject the Mercosur agreement.

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