Mumbai, April 04: Gold prices have surged to record highs, benefiting investors but increasing costs for buyers. However, a US-based analyst has projected a sharp decline in prices. John Mills, a strategist at Morningstar, forecasted a 38% drop in gold prices over the next few years.
The price of 24-carat gold is currently near Rs 90,000 per 10 grams in India and above $3,100 globally. Mills expects prices to fall to Rs 55,000 per 10 grams in India and $1,820 per ounce globally from the current $3,080 per ounce.
Gold’s recent rally was driven by economic uncertainty, inflation concerns, and geopolitical tensions. Investors turned to gold as a safe-haven asset, particularly amid ongoing trade disputes initiated during former US President Donald Trump’s tenure. However, multiple factors could now drive prices downward.
Mining profits reached $950 per ounce in the second quarter of 2024, while global reserves expanded by 9% to 216,265 tonnes. Australia has increased production, and the supply of recycled gold is rising. Central banks, which purchased 1,045 tonnes of gold last year, may slow acquisitions. A World Gold Council survey found that 71% of central banks plan to reduce or maintain their gold holdings.
Market saturation is another potential factor for a price drop. Mergers and acquisitions in the gold sector rose by 32% in 2024, indicating a peak market. Additionally, a surge in gold-backed ETFs mirrors patterns seen before past price corrections.
Despite Mills’ forecast, some financial institutions remain optimistic. Bank of America predicts gold could reach $3,500 per ounce in the next two years, while Goldman Sachs expects a year-end price of $3,300 per ounce.
The coming months will determine whether gold sustains its momentum or faces the projected decline.
