Central banks remain a key support
Tata MF said continued central-bank buying remains one of the strongest arguments for gold over the long term. Central banks purchased 289 tonnes of gold in the second quarter of 2026, while full-year purchases are estimated at 700–900 tonnes.
This is significantly above the pre-2022 annual average of around 400–500 tonnes, highlighting the structural shift in official-sector demand. According to Tata MF, central banks, particularly in emerging markets, continue to diversify reserves away from US-dollar assets.
The fund house also noted that strong central-bank purchases have helped support gold prices even during periods of substantial global gold ETF outflows.
China adds to festive-season backdrop
China is another important source of demand. Tata MF said Chinese gold imports have crossed 1,000 tonnes in 2026, already exceeding the country’s full-year imports in 2025.
Retail demand, ETF inflows and central-bank purchases have supported China’s physical gold market. Geopolitical uncertainty, including tensions in the Middle East and strategic competition between the US and China, could further strengthen demand for gold as a safe-haven asset.
US debt adds to long-term case
Tata MF also pointed to rising US debt and fiscal deficits as structural factors supporting gold. US government debt has crossed $40 trillion, while the fiscal deficit remains around 6–7% of GDP.
The fund house said concerns around debt sustainability, currency purchasing power and sovereign credit quality could increase the appeal of gold as a store of value.
Staggered buying preferred
Despite its constructive long-term outlook, Tata MF warned investors that gold’s recent volatility could result in sharp consolidations. It therefore favours staggered investment rather than attempting to time the bottom.
For Indian investors heading into the festive season, the message is therefore one of measured optimism: the 26% correction may have improved the entry point for long-term investors, but gold’s sharp price swings make disciplined, staggered buying more prudent than chasing a rally.
