New Delhi, Jan 6: Gold is expected to retain its importance as a reserve asset for global central banks in 2026, though the pace of accumulation may slow, according to a report by YES Bank Economics Research.

The moderation is likely to be influenced by easing geopolitical tensions, changing monetary policy conditions, and possible shifts in the trajectory of the US dollar.

The report explained that heightened global uncertainty and growing skepticism over the US dollar’s dominance as a reserve currency had driven a sharp rise in central bank gold purchases in recent years. While this underlying trend of diversification is set to continue, the intensity of buying may ease in 2026 as risk premiums decline and macroeconomic conditions become more stable.

YES Bank noted that the US Federal Reserve’s rate-cut cycle, which resumed in September 2025, has supported gold prices. This has been reinforced by weakening labour market indicators and softer inflation data in the United States. Expectations of further rate cuts could continue to put downward pressure on the dollar index, offering short-term support to gold.

However, the report cautioned that the possibility of a stronger US dollar in the second half of 2026 cannot be ruled out. Growth differentials between the US and other major economies, particularly Europe, could lead to dollar appreciation, which may act as a headwind for gold prices and moderate central bank demand.

Although net gold purchases by central banks remain significantly above long-term averages—reflecting continued diversification away from traditional reserve assets—the report observed that any easing of geopolitical risks could reduce the urgency for aggressive accumulation.

From a technical perspective, YES Bank projects gold prices could move towards USD 4,500–4,550 per ounce if levels above USD 4,400 are sustained. Conversely, a fall below USD 4,200 could negate the bullish outlook.

The report also highlighted that silver has been outperforming gold, supported by robust industrial demand from sectors such as renewable energy, electric vehicles, data centres, and defence, along with tightening supply conditions.

Overall, while gold’s role as a strategic reserve asset remains firmly in place, YES Bank expects central bank purchases in 2026 to shift from an exceptional surge to a more measured and sustainable pace.