Gold prices may still climb to $5,500 per troy ounce over the next 12 months, according to Lorenzo Portelli, Head of Cross Asset Strategy at Amundi Investment Institute, even as bullion remains stuck in a broad sideways range and faces pressure from inflation fears and hawkish Federal Reserve expectations.
Portelli argues that the current energy shock linked to the ongoing war in Iran should have only a short-term impact on inflation. That view matters for Indian investors because any renewed rise in global XAUUSD prices, combined with rupee moves against the U.S. dollar, can quickly feed into domestic gold rates.
Why does Amundi still expect gold prices to reach $5,500?
Amundi still expects gold to rise because it sees the current weakness as temporary, not structural. Portelli said his base view remains constructive on gold over the next year despite near-term volatility.
In Amundi’s latest precious metals report, Portelli said: “Looking ahead over the next 12 months, we remain constructive on gold and see potential for prices to move toward $5,500.”
That forecast stands out because gold has remained trapped in a broad sideways channel. Even so, Amundi believes the long-term drivers for bullion remain intact, especially as investors continue to seek safe-haven assets and portfolio protection.
For Indian investors, a move toward $5,500 an ounce would imply a major upside scenario for imported bullion prices, particularly if the Indian rupee (INR) weakens against the U.S. dollar at the same time.
What is keeping gold prices under pressure right now?
Gold is under pressure because short-term inflation fears have lifted hawkish interest rate expectations. Higher expected rates typically weigh on non-yielding assets such as gold.
The source article says gold remains trapped in a broad sideways channel and continues to be weighed down by short-term inflation fears. Those fears have been intensified by the recent energy shock tied to Middle East turmoil.
According to Portelli, surging energy prices linked to the chaos in the Middle East pushed annual inflation to 3.3%, the highest level in two years. That increase has kept markets alert to the risk that the Federal Reserve could maintain a restrictive stance for longer.
Still, bullion has already corrected sharply. Portelli noted that gold prices are down roughly 15% from January’s all-time highs, suggesting a significant portion of the negative news may already be reflected in market pricing.
How does Amundi view inflation and Federal Reserve policy?
Amundi believes the latest inflation shock is likely temporary, which reduces the need for a more aggressive Federal Reserve response. That is a key reason the firm remains positive on gold.
Portelli said that while headline inflation has risen, the underlying trend in core prices looks more contained. Over the last 12 months, core consumer prices rose 2.6%, while headline annual inflation reached 3.3%.
Why is core inflation important for gold?
Core inflation matters because it gives policymakers a cleaner read on persistent price pressures. If core inflation stays relatively stable, the Federal Reserve may feel less pressure to turn even more hawkish.
Portelli said core inflation remains above the Federal Reserve’s 2% target, but it has not accelerated. He added: “Core inflation remains more subdued and better contained, reducing the need for central banks to pursue an even more hawkish stance. In our view, the inflationary impulse triggered by the energy shock is likely to prove temporary rather than persistent.”
That distinction is important for precious metals. If investors conclude that inflation is easing beneath the surface, real yields may stop rising, which could support gold price recovery.
Why does Amundi think gold demand will stay strong?
Amundi expects gold demand to remain strong because buying is being driven by more than just U.S. interest rates. Portelli said central bank demand, reserve diversification and broader systemic risks continue to support bullion.
He argued that emerging market central banks are likely to keep buying gold as they diversify reserves away from traditional currencies. According to Portelli, this trend is unlikely to reverse anytime soon.
What did Portelli say about central bank gold buying?
Portelli said: “Central bank demand is likely to remain strong, especially among emerging market authorities that continue to diversify reserves away from traditional currencies. We do not see this trend reversing anytime soon. Gold remains a strategic asset for reserve managers seeking to reduce dependency on the US dollar and enhance portfolio resilience.”
This matters for Indian investors because sustained official-sector demand can provide a strong floor under global bullion prices. A structurally firm gold market can in turn support domestic prices even during short-term pullbacks.
How do debt and credit risks support bullion?
Amundi also sees rising sovereign debt and growing liquidity strains in private credit as supportive for hard assets. Portelli said these pressures should drive more investor interest into gold, even if short-term price swings remain elevated.
That view reinforces gold’s role as a safe-haven allocation rather than just a short-term inflation trade. In periods of financial stress, investors often return to precious metals to hedge systemic risk and policy uncertainty.
Could central banks sell gold to defend currencies?
Yes, some central banks could use part of their gold holdings tactically to defend their currencies during periods of market stress. However, Amundi does not view that as a long-term bearish signal for gold.
Portelli said that heightened volatility, including risks linked to geopolitical tensions in the Middle East, could push some central banks to temporarily mobilize part of their gold reserves. He stressed that such moves would reflect short-term policy management rather than a structural retreat from bullion.
He said: “In the near term, some central banks may choose to use part of their gold holdings tactically to defend their currencies amid heightened volatility, including risks stemming from geopolitical tensions in the Middle East. While such actions are possible, they should not be interpreted as a sign of a structural shift away from gold. Rather, they reflect short-term policy management in a more uncertain environment.”
For India, this point is relevant because currency volatility often affects landed gold costs. Even if international gold prices pause, a weaker INR can keep domestic gold rates elevated.
Why does Amundi still see gold as a safe-haven asset?
Amundi still views gold as a valuable safe-haven because it can protect against systemic risk, currency weakness and policy uncertainty. Portelli said gold is not a perfect hedge for every shock, but it remains strategically important.
He concluded: “Ultimately, we continue to view gold as a valuable safe-haven asset. It is not a universal hedge against every market shock, but it remains an effective protection against systemic risk, currency weakness, and policy uncertainty.”
That message is especially relevant for Indian investors balancing global volatility, Middle East geopolitical risk, Federal Reserve policy shifts and rupee fluctuations. If headline inflation cools from the 3.3% pace while core inflation stays contained near 2.6%, the market may start to refocus on central bank demand, sovereign debt risks and the longer-term bullish case for gold toward $5,500 over the next 12 months.
