‘Rupee Is Real Villain’ Keeping Gold Rate in India High, Says Tushar Badjate | Next Rally Triggers Decoded

Gold is often perceived as one of the safest havens for investors during times of uncertainty, but the current situation appears to have upended that belief. Contrary to the traditional notion, gold prices in India and across the world have witnessed a sharp correction since the onset of the West Asia crisis.

The recent gold paradox is a case of gold's safe-haven premium being overshadowed by a stronger US dollar, rising bond yields, and forced liquidations, according to Tushar Badjate, Director at Badjate Stocks & Shares Pvt. Ltd. Back in India, the rupee is complicating the dynamic as it keeps the domestic prices elevated.

In an exclusive conversation with Goodreturns, Tushar Badjate decodes why 'Rupee is the Real Villain' behind gold price surge in India, and key triggers that could spark a global gold rate rally. Edited excerpts from conversation:

Why is gold defying its traditional safe-haven trend despite the West Asia crisis?

Since early 2025, gold has drawn in a wave of speculative money - traders chasing momentum while central banks quietly stacked reserves. The late-February US-Israel strikes on Iran sent prices soaring, yet within days they had fallen over 6% as investors booked profits. The market had already priced in the conflict. It bought the rumour and sold the war. Today, gold's safe-haven premium is being eclipsed by a stronger dollar, rising real yields, and forced liquidations. When cash becomes king, even gold gets sold.

During the Russia-Ukraine war, gold initially rallied before correcting after the Federal Reserve's rate hikes. Is the current weakness in gold a repeat of that pattern, or are new structural factors influencing prices this time?

The pattern has different historical data attached to it. For instance, during the Russia-Ukraine war, gold came to light with no volatility and a rather stagnant growth period. However, in the current case, it is already backed by an annual return of over 60%. Moreover, in 2022, central banks were buyers but not at the scale seen since.
By 2025, central bank purchases hit 863 tonnes for the year, and gold surpassed US Treasuries in central bank reserves for the first time since 1996. This structural floor under prices did not exist in the same way in 2022.

Lastly, the key difference is transmission. Russia-Ukraine disrupted energy markets indirectly; Iran threatens a critical oil chokepoint. Higher oil prices feed inflation, delay rate cuts, and keep real yields elevated, creating a stronger and more sustained drag on gold than in 2022.

Even if international gold prices remain subdued, can domestic gold prices in India stay elevated?

Delhi raised the gold import duty to 15% last month. The highest ever. Prime Minister Narendra Modi himself asked Indians to stop buying gold for a year. Strong words from the top.

The rupee is the real villain here. It touched ₹95.86 to the dollar this month. Every gram of gold we consume is imported. Every gram is priced in dollars. When the rupee falls, your gold bill rises - regardless of what gold does in London or Chicago.

Ten grams cost ₹55,000 three years ago. The same quantity opens above ₹1,50,500 today. No jewellery boom caused this. Just a weak currency and a heavy import bill. Gold has weakened to a 2 month low. Global gold is correcting. Domestic gold is not. The duty wall and the rupee floor are holding prices up from below. International prices can fall all they want but it appears as if your jeweller hasn't even noticed.

Gold is down 1.8% from its January-end peak. The metal that was supposed to soar on war has instead been punished by it. So what turns this around?

Four triggers. They do not all need to fire together. The biggest trigger for gold is still a Fed pivot. Inflation fears linked to the Iran conflict have delayed rate cuts, but once the Fed begins easing, gold's outlook improves significantly. Historically, the metal has risen about 6% in the first two months of a rate-cutting cycle.
A weaker dollar follows automatically. The dollar is strong because the Fed is hawkish. Fix one, and you largely fix the other.

The most overlooked catalyst for gold is a US recession. A sharp slowdown would force the Fed to cut rates, driving yields lower and amplifying gold's appeal. While a recession is undesirable, it would be a near-perfect environment for the metal.

Geopolitical escalation is the wildcard, but the war alone may not be enough. Conclusively, it does not appear that the structural case for gold has gone. The market just needs a reason to remember it.

After delivering stellar returns in 2025, what is your outlook for gold in the second half of 2026? Are we looking at further correction, range-bound movement, or another strong rally?

Every major gold bull run in history has had at least two or three sharp corrections before the final top. This is only the second one in the current cycle. Investors who sold gold in 2022 when it corrected after Russia-Ukraine spent the next three years watching it triple. The same mistake is playing out again.

The structural case has not changed, as central banks are still accumulating, and the dollar's long-term credibility is still in question. Global debt levels are still at record levels. None of that gets resolved in six months.

The second half of 2026 is likely to be range-bound, somewhere between $4,200 and $4,800, until one catalyst breaks the stalemate. That catalyst is most likely the Fed. The moment rate cuts come back on the table, gold gets rerated overnight. Non-yielding assets do not stay cheap in a rate-cut cycle.