Over the past year, gold prices in India have surged by nearly 30%. In contrast, since September last year, the Indian equity market has experienced a significant downturn. As a result, many investors pulled out of the stock market and increased their investments in gold, which turned out to be profitable for them. Gold prices soared so high that, on April 3 at noon, the price of 10 grams of 24-carat gold in Kolkata reached ₹93,920.
However, experts now warn that gold prices in India may drastically fall — potentially dropping as low as ₹61,000.
According to market analysts, the recent surge in gold prices may not last long. Some experts believe the price of gold could decrease significantly — by as much as 36%. If that happens, the price of 10 grams of 24-carat gold could fall to around ₹60,000.
John Mills, an equity analyst at American financial services firm Morningstar, said the price of gold may drop to approximately ₹55,000 by 2029. However, considering the current market conditions, he has revised his forecast to about ₹60,000.
Why Might Gold Prices Drop?
According to Mills, there are several reasons behind the potential decline in gold prices. One major factor is increased supply. The rise in gold prices led to increased production by gold mines. As supply increases, prices could naturally fall.
Another factor is a possible drop in demand. Over the past few months, several central banks around the world bought large quantities of gold as a safe asset, driving demand up. This high level of demand is unlikely to continue in the future. If demand decreases, prices may follow.
Gold has already reached its peak price. Mills claims that the gold market has hit a saturation point, meaning it may not rise much further. His view is backed by recent market trends, including a rise in mergers and acquisitions in the gold industry.
However, it is worth noting that Mills is known for making bearish predictions about gold. Not all experts agree with his forecast of a steep price drop.