Gold Bubble Warning: Will Prices Crash by 40% or Keep Rising?
Gold Bubble Warning: Will Prices Crash by 40% or Keep Rising?
Experts divided as festive demand and central bank buying push gold to record highs
Gold prices in India are at historic levels, sparking both celebration and concern. On Wednesday, 24-carat gold was priced at ₹1,13,580 per 10 grams in Mumbai, with 22-carat at ₹1,04,040 and 18-carat at ₹85,190. Silver, too, is soaring, trading above ₹1,40,000 per kg in some markets. Despite a slight dip during Navratri, analysts believe the overall momentum remains bullish.
Since 2022, following the Russia-Ukraine conflict, central banks worldwide have increased their gold holdings to nearly 28% of global FX reserves, while reducing US Treasury exposure. Domestically, robust festive demand, a weaker rupee, and a soft US dollar continue to fuel the rally. Market watchers predict MCX futures could touch ₹1,14,500–₹1,15,300 per 10 grams and global spot trade may climb to $3,820–3,850 per ounce. Silver is expected to test $45–46 per ounce, or ₹1,37,000–₹1,38,000 per kg on MCX.
However, concerns of a bubble are growing. JPMorgan CEO Jamie Dimon warned that gold, alongside stocks and crypto, might be part of a larger asset bubble inflated by investor sentiment. ICICI Prudential’s S. Naren echoed similar caution, highlighting that any rally moving this fast carries the risk of a steep correction. Some fear prices could fall as much as 40% if the bubble bursts, even as Jefferies maintains that gold could climb to ₹2 lakh per 10 grams in the long term.
Adding to worries, gold was excluded from recent GST rate cuts. It will continue to attract 3% GST, plus 5% on making charges. That means buyers especially families preparing for weddings, will not see relief despite record-high costs.
For now, the outlook is mixed. While a correction remains possible, the broad consensus is that strong festive demand, dovish Fed signals, and global central bank buying will keep gold and silver on an upward trajectory, though volatility is likely.
Disclaimer: This article is for informational purposes only and should not be considered as financial advice. Gold and silver prices are highly volatile and influenced by global, domestic, and policy factors. Readers are advised to consult a certified financial advisor before making any investment or purchase decisions
