Analysts say gold is in an overbought range, warning of short-term pullback risks, with a potential new high of $4,200 in 2026

After experiencing a record surge, the strong upward momentum of gold is facing short-term correction risks. Multiple analysts and industry experts have warned that gold is currently in an overbought range and may see a healthy correction of 5%-6%, but its long-term bull market foundation remains solid, with expectations to break through $4,000 per ounce by 2026, and even reach a new high of $4,200.

On Tuesday, the spot gold price briefly hit a historic high of $3,689.27 per ounce. So far this year, gold prices have risen by about 40%, continuing the strong increase of 27% in 2024.

The direct factors driving the continuous rise in gold prices include the widespread expectation of an imminent interest rate cut by the Federal Reserve, ongoing geopolitical tensions, and investor concerns about the independence of the Federal Reserve. These factors, combined with strong purchasing demand from central banks around the world, have attracted significant funds into gold as a traditional safe-haven asset.

Despite the optimistic long-term outlook, traders and industry experts at the India Gold Conference held in New Delhi generally believe that the market is accumulating correction pressure at the current high levels. However, they also pointed out that any potential price correction could provide new buying opportunities for investors waiting to enter the market.

Short-term Correction Risks Emerge

Analysts have noted that after quickly breaking through the $3,400 and $3,500 ranges, gold has entered "unknown territory," with short-term technical indicators showing overbought conditions. Renisha Chainani, head of research at Mumbai refiner Augmont, stated:

“Gold is currently in an overbought area, and a 5%-6% correction may occur in the short term, followed by consolidation and a rebound.”

This view is supported by other experts. Philip Newman, managing director of consulting firm Metals Focus, pointed out that gold prices have hardly lingered in the $3,400 and $3,500 ranges, suggesting that the rise has been too rapid. He believes the market may see a potential correction after this rebound, but this would represent a “buying opportunity” for those waiting on the sidelines.

Multiple Positive Factors Support Long-term Bull Market

Despite the short-term risks, analysts believe that the macro fundamentals supporting gold have not changed. Nicholas Frappell, global institutional market director at ABC Refinery, believes that almost all previous price forecasts have reached their target levels faster than expected, reflecting the strength of market demand.

Analysts have identified key factors supporting the long-term bull market:

• Monetary Policy Easing: The market widely expects the Federal Reserve to announce an interest rate cut at the meeting on September 17. Trump has continuously pressured Federal Reserve Chairman Powell to cut rates more quickly, intensifying market expectations for a low-interest-rate environment. Gold typically performs well in a low-interest-rate environment
• Hedging Demand: Ongoing geopolitical risks and concerns about the global economy continue to solidify gold's position as the preferred asset for risk hedging.
• Strong Official and Investment Demand: Renisha Chainani emphasized, "The long-term bull market for gold appears intact, as demand, particularly from central banks and ETFs, continues to accelerate."

2026 Gold Price Target: Above $4,000

For future price trends, analysts have provided optimistic long-term forecasts. Philip Newman from Metals Focus expects gold prices to rise to around $3,800 by the end of this year.

Looking further ahead, breaking the $4,000 barrier has become a market consensus. Newman anticipates that gold prices may surpass $4,000 in 2026. Renisha Chainani from Augmont has given a more aggressive forecast, suggesting that after a short-term consolidation, gold prices could reach new highs above $4,200 in 2026. The vast majority of industry participants at the India Gold Conference expect the bull market for gold to continue until 2026, driven by U.S. interest rate cuts, strong investment demand, and geopolitical risks.

Silver Strengthens in Sync

Driven by the strong performance of gold, silver, which has both investment and industrial properties, has also performed well. On Tuesday, silver prices reached around $42.73 per ounce, hitting a 14-year high.

The rise in silver prices is not only benefiting from gold's strength but also from its solid fundamentals. Due to silver's widespread applications in electronics and solar panels, physical demand remains robust, coupled with market concerns over supply shortages, further driving up prices. Chirag Thakkar, CEO of Amrapali Group Gujarat, a major silver importer in India, stated:

"In addition to conventional industrial uses, the growing interest from investors is providing solid momentum for silver prices."