### The Tactical Retreat Under Way
Gold prices saw a significant slide on Tuesday, February 17, 2026, with April delivery futures on the MCX falling by Rs 2,228, or 1.44%, to Rs 1,52,532 per 10 grams [19]. This move mirrors a broader retreat in global markets, where Comex gold futures for April delivery dropped $119.6, or 2.37%, to $4,926.7 per ounce [19]. The decline was primarily attributed to easing safe-haven demand, a consequence of moderating geopolitical tensions and a strengthening U.S. dollar [19].
Comments from President Donald Trump suggesting indirect U.S. involvement in nuclear discussions with Iran, coupled with fresh Ukraine-Russia talks, offered glimmers of diplomatic progress, diminishing the allure of gold as a protective asset [19]. Simultaneously, the U.S. dollar index (DXY) traded above 97, up 0.19% for the day, reinforcing its strength and making dollar-denominated commodities like gold more expensive for international buyers [12]. This confluence of factors led to profit-taking after recent volatility, with spot gold declining 2.33% to $4,877.87 per ounce [26].
### The Enduring Bull Case Amidst Consolidation
Despite the current price pressure, market analysts emphasize that this phase is largely a consolidation within a persistent multi-year bullish trend for precious metals [19]. Gaurav Garg, a research analyst at Lemonn Markets Desk, noted that gold is currently consolidating in the Rs 1.55–1.58 lakh per 10 grams range, below previous peaks, viewing this weakness as a corrective phase rather than a trend reversal [19]. He advises investors to consider holding positions and rebalancing on dips, while advocating for staggered fresh allocations due to prevailing market choppiness.
Historically, gold prices have shown resilience, with spot gold up 67.68% compared to the same time last year [1]. Analysts' long-term outlook remains bullish; for instance, J.P. Morgan Global Research forecasts gold prices to push toward $5,000/oz by the fourth quarter of 2026 and sees $6,000/oz as a possibility longer term, driven by sustained central bank demand and investor diversification [24]. Goldman Sachs projects a base case of $5,400 per ounce for 2026, with UBS targeting $6,200 and Morgan Stanley identifying bull case scenarios reaching $5,700 [25].
### The Forensic Bear Case: Structural Weaknesses and Future Risks
While the long-term outlook is positive, immediate headwinds persist. Thin trading volumes were observed, partly due to Lunar New Year holidays in several Asian markets and a U.S. market holiday on Monday, which skewed market participation [19]. The U.S. dollar's strength is a significant constraint, as the DXY has weakened only 2.31% over the past month, despite being down 9.30% over the last 12 months [12].
Furthermore, upcoming Federal Reserve minutes from the January meeting are a key focus. Market expectations, as indicated by the CME FedWatch Tool, currently price in a June rate cut, but any deviation from this path could trigger volatility. A less dovish Fed stance, potentially signaled by the nomination of Kevin Warsh as the next Fed chair, could reinforce a data-dependent approach, making the central bank less tolerant of inflation overshoots and thus less supportive of gold [33, 43]. The broader market is also watching for any unexpected escalations in geopolitical events, which could quickly reignite safe-haven demand, but persistent diplomatic progress, particularly concerning Iran nuclear talks and the Ukraine-Russia conflict, could continue to suppress it [14, 39]. Unlike other precious metals like platinum, which has seen significant annual gains driven by industrial demand and substitution, gold's immediate upside is more directly tied to macro policy and geopolitical stability [5]. The performance of gold ETFs also reflects this caution, with some dropping up to 4% on Tuesday, indicating reduced investor conviction in the short term [38].