The new gold standard? Motilal Oswal explains the rise to $5,000 per ounce

Motilal Oswal continues to maintain buy on dips stance from medium to long-term perspective.

For decades, gold was the "break glass in case of emergency" asset. But as of early 2026, the emergency has become the new normal.

 

In a Precious Metals Quarterly Report released on February 24, 2026, Motilal Oswal Financial Services Ltd (MOFSL) revealed that gold has officially entered a "structural repricing phase." This isn't just a temporary spike; it’s a fundamental shift in how the world values money. With gold prices shattering the $5,000 per ounce barrier, the yellow metal has transitioned from a simple hedge to a cornerstone of the global financial order.

 

Breaking the Rules: Why High Rates Didn't Stop the Rally

 

Traditionally, gold prices drop when interest rates rise. Why? Because gold doesn't pay interest. However, between 2023 and 2025, something strange happened: gold prices rose even as real interest rates stayed positive.

 

According to MOFSL, this "decoupling" is a massive signal. Investors are no longer looking at short-term yields; they are looking at the mountain of global debt and the political pressure mounting on central banks. As trust in traditional "risk-free" government bonds wavers, gold has stepped in as "non-sovereign money"—an asset that no government can print or devalue.

 

“Gold’s strength despite positive real interest rates shows a clear shift in investor thinking. Real returns are increasingly seen as temporary and policy-driven, which reduces the cost of holding gold and strengthens its role as a safeguard against broader financial risks," said Manav Modi, Commodities Analyst, Motilal Oswal Financial Services Ltd.

 

Geopolitical Tensions and Trade Uncertainty Support Gold

 

The report highlights that rising geopolitical tensions across regions such as Eastern Europe, the Middle East, the Arctic, and parts of Asia have kept global uncertainty elevated. Alongside this, renewed trade tensions and tariff-related disruptions have led to higher inflation volatility, currency uncertainty, and pressure on global supply chains—conditions that have traditionally supported gold demand.

 

Tariff-related inflation pressures, combined with signs of slower economic growth, have further strengthened gold’s appeal as a safe and neutral asset during uncertain times.

 

Monetary Policy, Political Pressure and Trust in Central Banks

 

According to the report, expectations of monetary easing and increasing political pressure on central banks have added long-term support to gold prices. Rising debt-servicing costs and fiscal constraints have made it difficult for policymakers to keep interest rates meaningfully high for extended periods.

 

As confidence in traditional “risk-free” assets weakens, gold has gained importance as non-sovereign money—an asset that sits outside politically influenced financial systems.

 

 “Gold is increasingly being seen as a long-term reserve asset rather than just a short-term hedge. As fiscal stress increases and questions are raised around monetary independence, gold’s role as non-sovereign money has become more important, leading to a structural shift in demand," said Navneet Damani, Head of Research – Commodities, Motilal Oswal Financial Services.

 

Tight Physical Supply and Limited Availability

 

The report also points to tightening physical market conditions. Growth in global mine supply remains limited, while inventories across major exchanges have declined, reducing the availability of immediately deliverable gold. Long development timelines for new mines and rising production costs have further limited supply, helping prices remain resilient even during market volatility.

 

Rupee Depreciation and Strong Retail Demand

 

Currency depreciation has acted as a key driver of gold demand across emerging markets, especially in India. Rising local gold prices have reinforced gold’s role as a trusted store of value for households and retail investors. At the same time, investor participation through exchange-traded funds has recovered after several years of outflows.

 

Gold ETFs have seen renewed interest, with India emerging as a key long-term growth market, expanding gold demand beyond traditional buying patterns.

 

Central Banks Continue to Support Gold Demand

 

Central banks have remained the most consistent buyers of gold, with net purchases of around 1,000 tonnes per year for four consecutive years. The report notes that this buying has moved beyond short-term accumulation and has become a formal part of reserve management, driven by concerns around sanctions risk, reserve safety, and dependence on dollar-based assets.

 

 Key highlights of the report:

The report identifies three core pillars supporting this $5,000+ price floor:

 

Geopolitical Fragmentation: Tensions in Eastern Europe, the Middle East, and Asia, combined with trade tariffs, have made the dollar-centric system feel risky for many nations.

 

Central Bank Buying Spree: For four consecutive years, central banks have hoarded roughly 1,000 tonnes of gold annually. This isn't just a trend; it’s a formal strategy to diversify reserves away from sanctions risk and dollar dependence.

 

Physical Scarcity: Mine supply is stagnant. New mines take years to develop, and production costs are soaring. With exchange inventories declining, there is simply less "immediately deliverable" gold available to meet rising demand.

 

The India Angle: Rupee & Retail

For the Indian investor, the story is even more intense. Local gold prices have been propelled by two factors:

 

Currency Depreciation: As the Rupee fluctuates, gold has reinforced its status as the ultimate "store of value" for Indian households.

 

The ETF Revival: After years of quiet, Gold ETFs are seeing a massive resurgence. India is now a key growth market for digital and paper gold, moving the asset beyond just jewelry and into sophisticated portfolios.

 

What to expect? 

Motilal Oswal expects gold to remain well supported over the long term, as reserve diversification, limited supply growth, and ongoing global uncertainty continue to influence investment behaviour.

 

"As global reserves gradually diversify away from dollar-centric assets and physical supply remains constrained, gold prices are likely to stay supported around and above $5,000 per ounce. This cycle is being driven not just by inflation, but by confidence in fiscal and monetary systems," said Damani. 

 

"IV’s for Gold is above 20-25% hence staggered approach of investment and maintaining caution amidst the risk of profit booking or possible headwinds is justified. Strong base for the above-mentioned target is at $4000 and $4200 on COMEX which equates to ₹1,23,000 and ₹1,30,000 on domestic front assuming USD-INR at 91. For long-term investors, gold functions not as a hedge, but as a strategic monetary asset within portfolios navigating a post financial repression world," said the report.