Will gold prices touch Rs 70,000 mark by the end of 2024?

The year 2023 was a robust year for gold. Going by reliable sources, the precious metal returned 11.2% returns in 20 years. In the past 10 years, gold prices have been rising, except for 2014 and 2015. Even during the pandemic and the ongoing geopolitical conflicts, returns from gold were better than the returns from NIFTY 50.

This positive trend has raised expectations about the gold price forecast for 2024. Analysts and traders widely believe that gold prices will touch ₹ 70,000 this year. While it may be possible, it is essential to make a realistic assessment of the prevailing conditions. In this blog, we will look at some factors in favour, and against the potential price rise.

If considering investing in gold, it's imperative to stay updated with these trends and monitor how economic and geopolitical developments take place throughout the year.

Gold Rate Forecast in India

The gold rate forecast for India in 2024 shows a potential upward trend determined by several economic and geopolitical factors. Analysts foresee that gold prices could reach around ₹75,000 per 10 grams by the end of 2024. The prediction is based on several key reasons:

• Economic Uncertainties: Gold usually performs well during periods of economic instability and high inflation. In times of economic fears, including inflationary pressures are expected to support higher gold rates
• Geopolitical Tensions: Current geopolitical conflicts, predominantly in the Middle East, are also impacting gold prices. Increased pressures naturally increase demand for gold as a safe-haven asset, because of rising gold prices .
• Central Bank Policies: The decision of central banks, chiefly the US Federal Reserve has a critical role. If the Fed cuts interest rates, it could result in rising gold prices. The Reserve Bank of India's gold purchases are also in sync with this trend.
• Global Demand: Rising demand for gold in major markets like China enhances rise in goldprices. China's noteworthy gold acquisitions have significantly already influenced the market this year

Methods of Gold Price Forecasting

The following methods may provide insights into future gold price movements for a comprehensive gold rate forecast.

1. Essential Analysis:

• Analysing supply and demand factors.
• Examining macroeconomic indicators (e.g., inflation rates, interest rates).
• Tracking geopolitical events and economic stability globally.
• Evaluating central bank policies and gold reserves.

2. Technical Analysis:

• Using chart patterns 
• Applying technical indicators 
• Conducting trend analysis.
• Analyzing past price data and volume.

3. Quantitative Methods:

• Using statistical models (e.g., regression analysis).
• Implementing time series analysis 
• Applying machine learning algorithms
   

4. Sentiment Analysis:

• Tracking investor sentiment through surveys 
• Analyzing news sentiment using natural language processing 
• Detecting social media trends and discussions.
   

5. Macroeconomic Indicators:

• Evaluating global economic growth rates.
• Evaluating currency exchange rates, mainly the USD.
• Tracking commodity prices and their relationships.

6. Interest Rate Analysis:

Reviewing the influence of changes in interest rates on gold prices.
 

      7. Supply and Demand Dynamics:

• Linking real interest rates with gold prices.
• Examining production and gold reusing rates.
• Evaluating demand from jewelry, technology, and investment sectors.
• Monitoring central bank buying and selling activities.
   

8. Inflation and Inflation Expectations:

• Analyzing earlier connections between inflation rates and gold prices.
• Judging future inflation expectations and their probable effect.
• Global Economic Uncertainty and Risk:
• Monitoring political instability and conflicts.
• Evaluating economic crises and financial market volatility.
• Assessing global trade tensions and their impact on gold as a safe-haven asset.
   

9. Currency Fluctuations:

• Checking the inverse connection between the US dollar and gold prices.
• Evaluating currency devaluations and foreign exchange reserves.
   

Factors Leading to the Anticipated Gold Price Forecast in 2024

Gеopolitical Tеnsions:

Thе ongoing conflicts between Ukrainе-Russia and Israel-Hamas continuе to weigh on thе global еconomic landscapе. As is known, gеopolitical uncеrtaintiеs drivе invеstors towards safе havеn assеts likе gold, to hedge against markеt volatility and potеntial currеncy dеvaluation. As long as thеsе tеnsions pеrsist, thеy could push the dеmand for gold and thus its pricе too.

Inflationary Prеssurеs:

Global inflation rеmains a significant concеrn. Major cеntral banks of the world are attеmpting to strikе a dеlicatе balancе bеtwееn curbing inflation and fostеring еconomic growth. Persistent inflation wеakеns thе purchasing powеr of fiat currеnciеs, making gold even morе attractivе. If inflationary prеssurеs pеrsist throughout 2024, it could fuеl dеmand for gold and contributе to a pricе incrеasе.

Economic Slowdown Concеrns:

Fеars of a global еconomic slowdown have been rife with thе Intеrnational Monеtary Fund (IMF) rеvising its growth projеctions downwards. This can lеad to incrеasеd markеt volatility, risk avеrsion and potеntially driving invеstors towards gold as a pеrcеivеd hеdgе against еconomic uncеrtainty.

Wеakеning Rupее:

Thе valuе of thе Indian rupее plays a crucial rolе in dеtеrmining thе domеstic pricе of gold. A wеakеr rupее rеlativе to thе US dollar lеads to a risе in gold pricеs in India. If thе rupее dеprеciatеs in 2024, it could translatе to a highеr domеstic pricе for gold and push it closеr to thе ₹ 70,000 mark. On 20 February 2024, INR-USD rate was Rs. 82.96. The same last year was 82.75. The rupee has been trading at to Rs. 83 levels per 1 USD between February 9, 2024 and February 18, 2024. The weakening began in the second half of 2023.

RBI’s Purchase of Gold:

As per reliable information, the Reserve Bank of India bought nine tonnes of gold in the September quarter FY2023-24. In January 2024, it made its highest purchase of gold in 18 months, and if buying continues, the price of gold in the international market will rise. Generally, such purchases hint at volatility in US treasuries and the forex markets.

Factors Detrimental to the Gold Price Forecast in 2024

• Monеtary Policy Tightеning: Cеntral banks across thе globе arе еmbarking on intеrеst ratе hikеs to combat inflation. Rising intеrеst ratеs gеnеrally makе gold lеss attractivе comparеd to othеr invеstmеnt options likе bonds. This could dampеn invеstor dеmand for gold and limit pricе incrеasеs.
• Strеngth in US Dollar: Thе US dollar is strengthening vis-a-vis the INR. A continuеd strеngthеning of thе dollar could put downward prеssurе on gold pricеs as it bеcomеs morе еxpеnsivе for buyеrs holding othеr currеnciеs.
• Improvеd Risk Sеntimеnt: If gеopolitical tеnsions еasе and global еconomic concеrns rеcеdе, it could lеad to a rеturn of risk appеtitе in thе markеt. This could drive invеstors away from safе havеn assеts likе gold towards riskiеr assеts offеring potеntially highеr rеturns and potеntially limiting gold pricе growth.
• Elections: The rupee may weaken further as 2024 is the year for General Elections in India. Other countries around the world are headed for elections this year too. Collectively, it means general political uncertainty will prevail. There is likely to be volatility in the markets due to uncertainty in outcomes.

Impact of Rising Gold prices on Gold Loan

The rising gold prices impact gold loans significantly, generating opportunities and challenges for borrowers and lenders. In the case of borrowers, the increase in gold prices means the value of their security escalates. This allows them to secure higher loans against the same quantity of gold. This is useful for individuals and businesses looking for extra liquidity. However, higher gold prices can also mean increased interest rates and stricter loan terms. Usually, lenders intend to lessen the risk related to shifting gold values. For the lenders, the appreciation in gold prices improves the safety of their loan portfolio, lowering the risk of default. However, lenders need to constantly monitor the market trends and accordingly, the instability in gold prices in market trends and adjust their lending policies for gold prices. So, gold loan borrowing capacity is enhanced when the gold price rises.

Conclusion

While all eyes are set on the expected gold rate in 2024 in India, the ground realities do not give clear signs of when exactly it will happen. Nevertheless, the rupee has been weakening; RBI has been purchasing gold, and the demand for gold is expected to increase. General elections this year may contribute to political uncertainty. Also, February-March is generally a lean period for jewellery sales, so demand may slow further. Also, the already high prices may dissuade further purchases of gold. Overall, gold may end up being close to ₹ 70,000 mark this year if the US does not hike interest rates significantly.

FAQs

Q1. How high will gold go in 2025?

Ans. Experts project a continued rise in gold prices for India in 2025. Estimates range from reaching Rs. 73,139 per 10 grams (current price in May 2024) to even tripling to Rs 200,000. This hinges on global factors but suggests a potentially significant increase.

Q2. Will gold be worth more in 10 years?

Ans. Most financial experts believe gold will be more valuable in 10 years. Historically, gold acts as a hedge against inflation and economic uncertainty. With potential future recessions and rising global debt, gold's demand as a safe-haven asset could increase its price. Predictions vary widely, but many analysts see gold's value rising steadily over the next decade. However, there's no guarantee, and gold prices can fluctuate significantly. 

Q3. What will be the gold rate in 2030 in rupees?

Ans. It's impossible to predict the exact gold rate in 2030, but some estimates suggest it could reach Rs. 1,11,679 per 10 grams based on historical trends. However, this is just a forecast, and the actual price could be higher or lower.

Q4. Will gold prices reduce in the future?

Ans. significant drop in gold prices in the near future is unlikely. Experts point towards gold maintaining its value or even increasing due to factors like:

• Economic uncertainty: If recessions or financial crises occur, gold's status as a safe-haven asset could increase its price.
• Inflation: Gold is seen as a hedge against inflation, so rising inflation could make it more attractive and expensive.
• Global tensions: Geopolitical conflicts can heighten demand for gold, pushing prices higher.

Q5. What is the future prediction of gold in India?

Ans. It is projected that inflation in 2024 will vary from 4.6% to 4.8%. By the middle of 2024, inflation is perhaps going to drop to about 4% and then slowly increase. What will be the price of gold in 2024? Experts forecast that in 2024, the price of gold will possibly reach Rs.75,000 per 10 grams.

Q6. What is the use of gold price prediction

Ans. Forecasting rise and fall in the daily gold rates, can assist investors to decide when to buy or sell gold.

Q7. Why will gold prices increase?

Ans. For any change anywhere in the world, be it for jewellery or for any industrial application, gold price will be affected. The rise in gold price is directly proportional to the demand for gold. Demand – supply is a determining factor for gold production.

Q8. What is affecting gold prices today?

 Ans. Factors like demand and supply, inflation and global market conditions influence the gold price in India or in any other country.

Q9. Who decides the gold rate in India?

Ans. There is no particular entity that fixes gold prices in the country. However, the Indian Bullion Jewellers Association (IBJA)has a significant role in setting gold rates every day.

However, there are also factors that could cause gold prices to fall, like rising interest rates or a significant economic boom. Overall, the future of gold prices is uncertain, but a major decrease seems unlikely.