Gold Rate Set to Fall? Analysts Predict ₹56,000 — Here’s Why

Gold prices, which recently touched record highs globally and in India, may be heading toward a steep fall, according to market analysts. While currently trading around ₹90,000 per 10 grams in India, some reports suggest that the yellow metal could drop as low as ₹56,000 in the coming years.

A key report by ET cites US-based Morningstar analyst John Mills, who predicts a potential 38–40% decline in gold prices. If this projection materializes, gold could see a significant correction in the domestic market, bringing prices down by nearly ₹35,000 per 10 grams.

What’s Causing the Predicted Drop?

One of the main reasons for the anticipated decline is the increased supply of gold. In the second quarter of 2024, mining profits surged to $950 per ounce, encouraging higher output. Global gold reserves have also increased by 9%, reaching 216,265 tonnes.

Simultaneously, demand is weakening, especially from central banks. A World Gold Council survey revealed that 71% of central banks either plan to reduce their gold reserves or keep them unchanged, reversing a trend that had previously supported gold prices.

Another indicator of market saturation is the 32% rise in gold-related mergers and acquisitions in 2024, which analysts view as a sign that the industry has hit peak valuation.

Mixed Forecasts from Financial Institutions

Despite these bearish indicators, some major financial institutions remain bullish. Bank of America has forecasted gold reaching $3,500 per ounce within the next two years. Goldman Sachs is also optimistic, predicting a rise to $3,300 per ounce by the end of 2025. If these forecasts prove accurate, gold prices in India could exceed ₹1 lakh per 10 grams.

With such conflicting predictions, gold investors are advised to stay updated and cautious. Whether the market witnesses a sharp correction or a fresh rally, the next few months could be crucial for the future of gold.