Gold prices have been hitting new highs, recently reaching ₹78,450 per 10 grams. However, according to a report from Motilal Oswal, the price of gold might experience a brief period of consolidation, meaning it could stabilize or even see a slight decline before rising again. The wealth management firm predicts that gold prices may correct by 5-7%, as it’s unusual for gold to increase by 32% in a single year, something that hasn’t happened since 2000.
The report adds that this correction will likely be temporary, with gold prices expected to climb again afterward. Motilal Oswal predicts that gold could reach ₹86,000 per 10 grams over the next two years. This anticipated rise is backed by several factors that continue to drive strong demand for the precious metal.
History of gold (24 karat) price
| Year | Gold (24 Karat) Rate in India (approximate in INR/10gm) |
|---|---|
| 2024 (September 23) | 74,530 |
| 2023 | 63,203 |
| 2022 | 55,017 |
| 2021 | 48,099 |
| 2020 | 50,151 |
| 2019 | 39,108 |
| 2018 | 31,391 |
| 2017 | 29,156 |
| 2016 | 27,445 |
| 2015 | 24,931 |
| 2014 | 26,703 |
| 2013 | 28,422 |
| 2012 | 30,859 |
| 2011 | 27,329 |
| 2010 | 20,728 |
| 2009 | 16,686 |
| 2008 | 13,630 |
| 2007 | 10,598 |
| 2006 | 9,265 |
| 2005 | 7,638 |
| 2004 | 6,307 |
| 2003 | 5,600 |
| 2002 | 4,990 |
| 2001 | 4,300 |
| 2000 | 4,400 |
Factors Behind the Gold Surge
There are several reasons for gold’s recent surge in price. One major factor has been the firm global demand for gold, which remains strong and is likely to persist until the end of the festive season in India. Additionally, the upcoming US presidential election could introduce more volatility into the financial markets, potentially causing gold prices to fluctuate even more.
The report also highlights the role of domestic exchange-traded funds (ETFs), imports, and positions held in the market, all of which are supporting higher gold prices. For example, SPDR Gold Shares, one of the largest gold-backed ETFs in the world, has seen increased activity, signaling that investors are bullish on gold.
Key Drivers in 2024
So far in 2024, the US Federal Reserve’s monetary policies and global geopolitical tensions have played a significant role in pushing gold prices higher. As central banks around the world, including the US Federal Reserve, maintain uncertain or cautious approaches to interest rates, many investors have turned to gold as a safe-haven asset, driving up demand and prices.
Festive and Wedding Demand in India
In India, festive and wedding seasons are historically strong periods for gold demand. The report notes that central banks are also buying more gold, which boosts overall market sentiment. Domestic demand, especially for weddings and festivals, will likely remain high, helping to support gold prices. As we approach the Diwali festival and the peak wedding season, demand is expected to increase, further driving up the price.
Recovery in Rural Demand
Another important factor driving the demand for gold is the recovery of rural demand in India. The report highlights that rural economic conditions have been improving, particularly due to a good monsoon season and higher crop sowing. Rural households, which are traditionally strong consumers of gold, are expected to buy more as their economic situation improves, especially during the festive period.
Government Policies and Their Impact
The Indian government’s policy decisions have also played a role in the gold market. A cut in import duties has made gold cheaper for Indian consumers, which has encouraged more buying. Additionally, changes in tax rules for gold ETFs, announced in the Union Budget, have further boosted investor interest in gold-backed financial products like ETFs. These changes have created favorable conditions for increased investment in gold in India, which has contributed to the rising prices.
Outlook for the Future
Looking ahead, the report suggests that gold prices are likely to remain strong, despite the expected 5-7% correction. Over the next two years, prices could rise significantly, reaching as high as ₹86,000 per 10 grams. This growth will be supported by global demand, central bank purchases, and strong domestic buying during key seasons like festivals and weddings.
In summary, while a short-term dip in gold prices is expected, the long-term outlook remains positive. Strong demand, both globally and domestically, along with favorable economic conditions in rural areas and supportive government policies, will likely drive gold prices higher in the coming years.
