Will Gold Prices Fall Below ₹56,000? Morningstar Forecasts 40% Decline Despite Record Highs
Will Gold Prices Fall Below ₹56,000? Morningstar Forecasts 40% Decline Despite Record Highs
Gold prices have soared to historic highs, with 24-carat gold currently trading at approximately ₹90,000 per 10 grams in India and over $3,100 per ounce in global markets. However, investment research firm Morningstar has issued a striking forecast, predicting a potential 40% decline in gold prices, which could bring Indian rates down to around ₹55,000 per 10 grams in the near future.
Senior strategist at Morningstar, projects that global gold prices may fall to $1,820 per ounce—a dramatic shift from current levels. This outlook suggests significant volatility ahead for both investors and consumers.
Key Drivers Behind Morningstar’s Bearish Gold Forecast
Morningstar’s projection stems from multiple global economic and market factors:
- Rising Gold Supply: Increased mining output and profits have led to greater gold availability. The influx of recycled gold has further contributed to oversupply, potentially putting downward pressure on prices.
- Weakening Demand: Central bank purchases—over 1,000 tonnes last year—are expected to decline. A World Gold Council survey reveals that 71% of central banks plan to either reduce or maintain their current gold holdings, signaling a slowdown in institutional demand.
- Market Saturation Risks: The gold sector has seen a 32% spike in mergers and acquisitions during 2024, indicating market consolidation. Meanwhile, the growth in gold-backed ETFs mirrors patterns seen ahead of past price corrections.
Diverging Opinions: Is a Price Crash Imminent?
While Morningstar anticipates a steep correction, other major financial institutions offer a contrasting perspective. Bank of America estimates gold could climb to $3,500 per ounce within two years, and Goldman Sachs projects a year-end target of $3,300 per ounce.
What Lies Ahead for Gold Investors?
With predictions diverging sharply, the gold market is poised for a potentially volatile phase. Whether prices continue their record-breaking rally or correct sharply as forecast by Morningstar remains to be seen. Investors are advised to closely monitor global economic trends, central bank policies, and supply-demand dynamics before making gold-related investment decisions.
