Gold Monthly for February 2026

Gold began the new year on a strong footing, carrying forward the momentum from the previous year and extending its upward rally. In January, gold prices appreciated by 12.75%, registering fresh record highs and decisively breaching the USD 5,000 per ounce level to register an all time high of around $5600 per ounce. However the metal could not hold onto the gains and experienced a sharp decline in prices in the last week of the month. The rally during the first month of the year was primarily driven by elevated geopolitical risks, accommodative central bank policies, a weakening U.S. dollar, and rising demand from both retail and institutional investors.

In the domestic market, gold prices in India crossed ₹1,50,000 per 10 grams for the first time. This surge was driven by a combination of higher global gold prices and a depreciating Indian rupee. The rupee weakened repeatedly during the month, recording a cumulative depreciation of 2%. As a result, gold prices in India closed the month at ₹164400 per 10 grams, while the metal was trading at $4865 per ounce on the COMEX on the final trading day of January.

Outlook:

The rally in gold has been remarkable, allowing it to outperform most major asset classes. While the metal continues to be supported by strong underlying fundamentals, the emergence of new challenges and potential headwinds cannot be ruled out. A resolution of recent geopolitical tensions and stabilization in the U.S. dollar could exert short-term downward pressure on gold prices.

Nevertheless, the medium- to long-term outlook for gold remains constructive. Ongoing concerns surrounding the credibility of the reserve currency, rising fiscal imbalances, and continued diversification by central banks continue to underpin demand. In this context, any short-term pullback should be viewed as a healthy market adjustment rather than a reversal of the broader trend, potentially creating more favourable conditions for long-term positioning.

Geopolitical Risk:

At the start of the month, the United States carried out a military strike against Venezuela and detained President Nicolás Maduro. While the official justification cited drug-trafficking allegations, market participants largely interpreted the action as being driven by U.S. strategic interests in gaining access to Venezuela’s substantial oil reserves. The development added immediate pressure to crude oil markets, with prices declining sharply and falling below $ 60 per barrel.

Furthermore, ongoing protests in Iran against the current regime remained a critical source of geopolitical risk. Repeated comments from U.S. President Donald Trump regarding Iran, including warnings of potential military confrontation, kept risk sentiment elevated throughout the month.

Geopolitical focus also extended to the Arctic region, where the United States continued efforts to strengthen its strategic presence. The U.S. administration reportedly offered a 700-billion-dollar buyout to Denmark for acquiring Greenland. However, speaking at the World Economic Forum in Davos, President Trump indicated a preference for securing strategic access through diplomatic and economic engagement rather than coercive measures while not ruling them out if necessary.

These escalations introduced an additional layer of risk across global financial markets. Heightened uncertainty proved supportive for hard assets as the gush of liquidity chased gold and other hard assets including white metals like silver benefiting from geopolitical instability.

Federal Reserve, Rates and Economy:

The ongoing rift between President Donald Trump and Federal Reserve Chair Jerome Powell has been a subject of discussion for some time. In January, the Federal Reserve was subpoenaed by the Department of Justice, and charges were brought against Jerome Powell. Powell’s allegations that President Trump sought to influence the Department of Justice have raised significant concerns among market participants regarding the growing threat to the independence of the U.S. central bank.

Inflation in December was reported at 2.7%, unchanged from November, while the unemployment rate remained steady at 4.4%. Signs of softening in the labour market, alongside persistently elevated inflationary pressures, had previously prompted the Federal Reserve to implement three rate cuts in 2025.

At its January policy meeting, the Federal Reserve opted to keep the repo rates unchanged, a decision that was widely anticipated by market participants. In his post-meeting press conference, Chair Jerome Powell struck a cautiously optimistic tone, noting that overall economic growth remains resilient and that labour market conditions are showing early signs of stabilization, even as payroll growth continues to be subdued.

Powell is likely to preside over only two more FOMC meetings and is expected to resist rate cuts absent a clear deterioration in labour market conditions. As we approach the midterm elections in the US, Trump will be keen to project a stronger economy, thus conflicting and making rate cuts politically and economically harder to justify. Within that narrow window of Powell’s exit and Trump’s economic posturing, there could be possibility of two rate cuts under the new Trump nominated Fed Chair, which could further fuel gold.

In the last week of January , president Donald Trump officially nominated Kevin Warsh, a former Federal Reserve governor, to be the next chair of the U.S. Federal Reserve, replacing Jerome Powell when his term ends in May 2026—a choice aimed at aligning the central bank more closely with Trump’s desire for lower interest rates and a more accommodative monetary policy, though the pick must still win Senate confirmation amid debate over Fed independence and mixed reactions from markets and policymakers. However, his appointment led to some strength in dollar due to his hawkish views on monetary inflation leading to some profit booking in gold.

Declining Dollar:

After remaining under sustained pressure throughout 2025, the U.S. dollar continued to weaken in January. Deteriorating macroeconomic conditions have remained a key headwind, with rising debt levels and widening fiscal deficits raising concerns about the long-term health of the U.S. economy and the durability of the dollar’s status as the world’s primary reserve currency amidst erratic policymaking. In recent months, global central banks have increasingly diversified their reserve holdings away from the U.S. dollar. At the beginning of 2025, the dollar accounted for over 46% of global foreign exchange reserves; by year-end, this share had declined to approximately 40%. This gradual erosion in reserve allocation underscores growing apprehension surrounding the dollar’s dominance. The weakening dollar and mounting questions over its reserve-currency status have acted as a significant catalyst for the ongoing bull run in gold. Amidst the vacuum created by the lack of credible alternative currency capable of assuming global reserve status, central banks are expected to continue increasing gold allocations as a strategic diversification tool.

In Conclusion:

While gold has delivered a strong performance, it is important to reassess the strength and sustainability of its key drivers and current market conditions. At prevailing price levels, investors may consider adopting a cautious approach by seeking measured entry points rather than allocating capital in response to momentum-driven pressure . The possibility of a pullback or short-term correction / consolidation cannot be ruled out and should be viewed as an opportunity to incrementally increase exposure.

Despite gold’s strong momentum and its outperformance relative to other asset classes in 2025, excessive allocation based solely on recent performance may adversely impact portfolio balance. A disciplined, strategic approach to allocation remains prudent, with gold serving as a diversification and risk-management tool. A disciplined allocation of about 15% to gold remains optimal for diversification and risk management within a balanced portfolio.

Source : World Gold Council, Bloomberg

Above article is authored by Quantum.

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