Gold at Record High: Time to Buy, Book Profits, or Wait?

Gold prices hit a record high on Monday, as investors took refuge in it as geopolitical uncertainty intensified and the political landscape in the US became unfavourable. Expectations of interest rate cuts also played a role. The rally raised global bullion prices to 4577 dollars an ounce, according to the London Bullion Market Association (LBMA).

In early Asian trade on January 12, spot gold briefly touched a record 4,600.33 dollars an ounce, as reported by Reuters. Prices later reversed but remained elevated, trading at 4,580.60 dollars an ounce by 2.28 am GMT, marking a gain of 1.77 per cent from the previous close.

Gold prices in India

In India, gold prices remained strong, with 24-carat gold trading around Rs. 14,313 per grams on Monday, January 12, 2026. Prices varied across cities, ranging between Rs. 14,313 and Rs. 14,220 per grams.

On the Multi Commodity Exchange (MCX), gold futures ended the previous Friday's session at Rs. 137,875 per 10 grams for 24-carat purity. This was a marginal rise of 0.04 per cent from the earlier close of Rs. 138,819. Traders and jewellers widely track MCX futures prices, which reflect expectations of where gold prices are heading.

Why gold glitters

One of the key tailwinds is fresh political pressure on the US Federal Reserve. Fed Chair Jerome Powell said the central bank had been served grand jury subpoenas by the Justice Department. The subpoenas are linked to his June testimony before Congress regarding the renovation costs of the Federal Reserve's headquarters.

This development raised concerns about the sovereignty of the US central bank, especially in the wake of the differences between President Trump and Powell. Investors find gold as a safe haven during the periods of uncertainty, as the yellow metal holds store value with little effect on the policy changes.
In the current scenario, the investor sentiment was bolstered by the worsening geopolitical tensions in the Middle East, especially the deadly protests in Iran, raising fears of political instability, including the possibility of the Islamic Republic being overthrown.

US President Donald Trump has hinted that he may consider possible intervention in Iran. He is repeatedly sharing his interest in Greenland, creating upset among the NATO alliance. These developments came just over a week after Trump held Venezuelan leader Nicolas Maduro captive, increasing concerns about global political stability and energy markets.

Charu Chanana, a strategist at Saxo Markets in Singapore, said the latest developments show how many risks markets are dealing with at the same time. These include geopolitical tensions, debates over economic growth and interest rates, and renewed worries about institutional stability, as reported by Bloomberg.

Interest rates and their impact on gold

Another major factor supporting gold is the outlook for US interest rates. Gold does not generate interest income, unlike bonds or bank deposits.

Markets have already priced in at least two interest rate cuts this year. This follows three consecutive rate reductions delivered by the Federal Reserve in the second half last year. Lower borrowing costs generally weaken the US dollar and boost demand for gold, which is priced in dollars globally.

What Should Investors Do?

Gold has just come out of a record-setting year in which nearly all supportive factors aligned. These included falling interest rates, rising geopolitical tensions, and declining trust in the US dollar. According to Bloomberg, more than a dozen money managers said they have chosen not to book large profits, as they remain confident about gold's long-term strength.

J.P. Morgan Commodities Research expects the upward trend to continue. The bank's quarterly forecasts show gold averaging 4,440 dollars an ounce in the first quarter of 2026, rising to 4,655 dollars in the second quarter and 4,860 dollars in the third quarter. Prices are projected to average 5,055 dollars an ounce in the final quarter of 2026, taking the full-year average to 4,753 dollars.
For 2027, J.P. Morgan expects prices to remain elevated, with quarterly averages ranging from 5,140 dollars to 5,400 dollars an ounce and a full-year average of 5,245 dollars.

Natasha Kaneva, head of Global Commodities Strategy at J.P. Morgan, said the current rally is unlikely to move in a straight line, but the forces pushing gold higher are far from exhausted. She said the long-term trend of central banks and investors diversifying their reserves into gold is continuing. Kaneva added that the bank expects demand to drive gold prices towards 5,000 dollars an ounce by the end of 2026.