Gold prices to fall below Rs 56,000? Morningstar analyst predicts nearly 40% decline as yellow-metal hits all-time high

Gold prices have surged to unprecedented levels, benefiting investors but straining consumers. However, a US-based analyst has predicted a sharp decline. A US-based Morningstar analyst has forecasted a 38% drop in the next few years.

The price of 24-carat gold is near Rs 90,000 per 10 grams in Indian markets and above $3,100 in the global markets. A potential decline of nearly 40% could bring it down to around Rs 55,000 per 10 grams in India. John Mills, a strategist at US-based Morningstar, expects gold prices to fall to $1,820 per ounce from the current $3,080 per ounce, a steep reduction.

Factors Driving a Potential Price Drop

Gold’s recent rally was fueled by economic uncertainty, inflation concerns, and geopolitical tensions. Investors turned to gold as a safe asset, particularly amid ongoing trade disputes initiated during former US President Donald Trump’s tenure. However, multiple factors could now drive prices downward:


Increased Supply: Gold production has surged, with mining profits reaching $950 per ounce in the second quarter of 2024. Global reserves have expanded by 9% to 2,16,265 tonnes, with Australia ramping up production and recycled gold supply rising.

Declining Demand: Central banks, which purchased 1,045 tonnes of gold last year, may slow acquisitions. A World Gold Council survey found that 71% of central banks plan to reduce or maintain their gold holdings.

Market Saturation: Mergers and acquisitions in the gold sector increased by 32% in 2024, a sign of a peak market. Additionally, a surge in gold-backed ETFs mirrors patterns seen before past price corrections.

BoFA, Goldman Sachs Expect Price Surge

Despite Mills’ forecast, some major financial institutions remain optimistic. Bank of America predicts gold could reach $3,500 per ounce in the next two years, while Goldman Sachs expects a year-end price of $3,300 per ounce. The coming months will determine whether gold sustains its momentum or faces the projected decline.