In its October 2026 view, Tata MF said the correction in gold has been driven largely by macroeconomic factors such as higher US Treasury yields and a stronger US dollar, rather than a weakening of the metal’s underlying fundamentals.
Gold had peaked at around $5,595 per ounce in January 2026 and was trading at about $4,138 per ounce at the time of Tata MF’s assessment, representing a correction of roughly 26% from the peak.
The fund house said this has made current levels a more attractive entry point for long-term investors, while favouring staggered investment.
Central banks remain a key support for gold
One of the main reasons cited by Tata MF is continued buying by central banks. Central banks purchased 289 tonnes of gold in the second quarter of 2026, while full-year purchases are estimated at 700–900 tonnes, compared with a pre-2022 annual average of around 400–500 tonnes, according to the fund house.
Tata MF said reserve diversification away from US-dollar assets remains an ongoing trend, with China and other emerging-market central banks contributing to demand.
The fund house also highlighted a shift in gold demand from exchange-traded funds (ETFs) towards central banks in recent years. It said strong central bank purchases helped support gold prices even when global gold ETFs experienced substantial outflows in 2022–23.
Global gold ETF flows again saw sharp outflows from March 2026 following the onset of the US-Iran conflict, but Tata MF said flows showed early signs of stabilisation from July.
China adds another layer of demand
China is another factor highlighted in Tata MF’s long-term outlook for gold.
Chinese gold imports have crossed 1,000 tonnes in 2026, already exceeding the full-year volume for 2025, the fund house said. Retail demand, ETF inflows and central bank purchases have supported the country’s physical gold market.
Tata MF also pointed to the broader geopolitical environment, including tensions in the Middle East and strategic competition between the US and China, as factors that could continue to support demand for safe-haven assets.
US debt and fiscal concerns
The fund house also sees elevated US debt and fiscal deficits as longer-term considerations for gold.
US government debt has crossed $40 trillion, while the fiscal deficit is around 6–7% of GDP, according to Tata MF. It said rising debt and deficits can raise concerns about currency purchasing power and sovereign credit quality, potentially supporting demand for gold as a store of value.
Silver’s supply deficit is the key argument
For silver, Tata MF’s argument is centred more on the supply-demand balance.
The fund house said 2026 is on track to be the sixth consecutive year of a global silver deficit, with demand exceeding available supply. Industrial applications account for the majority of silver consumption, and industrial demand has increased steadily between 2021 and 2024, it said.
China’s position in the silver supply chain is another factor. Tata MF estimates that China holds around 11% of global silver reserves and controls 60–70% of global refining capacity. Any tightening of supply-chain controls or prioritisation of domestic availability could put additional pressure on global supplies, it said.
Taken together, the persistent supply deficit and rising industrial demand underpin Tata MF’s constructive long-term view on silver, although the fund house expects near-term price volatility to remain.
Tata MF cautions against chasing the rally
Despite its bullish long-term view, Tata MF has cautioned investors against assuming that recent price gains will continue uninterrupted.
The fund house said the sharp rally in gold and the rapid rise in silver prices have increased volatility, and such moves can be followed by sharp consolidations. It therefore favours staggered investment and has asked investors to consider the risks before increasing exposure to gold and silver directly or through investment products.