Gold prices to go down, Analysts predict 40% decline by as much as Rs 55,000!

Gold prices have skyrocketed leaving investors are over the moon while buyers are out of pocket by a lot of money. Still, some authorities believe this surge may be nearing its end. One US analyst has forecast gold prices to drop by a record 38% in the coming years.

The value of 24-carat gold has increased to an all-time high of close to Rs 90,000 for 10 grams in India and above $3,100 across the world. With a decline in prices by 40%, gold might cost just about Rs 55,000 per 10 grams in India, says a forecast by John Mills, Morningstar strategist, who anticipates the price of gold falling to $1,820 per ounce from the present level of $3,080 per ounce.

So, what’s causing this possible decline? To begin with, gold mining has gone up in leaps and bounds, with mining profits reaching $950 an ounce during the second quarter of 2024. Global gold reserves have increased by 9% to 2,16,265 tonnes due to higher production in Australia and higher recycled gold supply.

Another reason is weakening demand. Central banks, who purchased 1,045 tonnes of gold in the previous year, may reduce their buying. A recent poll discovered that 71% of central banks intend to decrease or keep their gold reserves unchanged. The gold industry has also witnessed an increase in mergers and acquisitions, which may be an indication of a peak market.

Interestingly, not all analysts concur with this dismal outlook. Some big financial institutions, such as Bank of America and Goldman Sachs, believe gold prices will continue to climb. Bank of America estimates gold may reach $3,500 per ounce within the next two years, while Goldman Sachs predicts a year-end price of $3,300 per ounce.

The coming months will be instrumental in establishing whether gold prices will keep going up or plunge. One thing for certain is that investors and consumers will be closely monitoring the market.

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