Gold prices likely to touch Rs 70,000 in 2024, say experts

Mumbai: Continuing to glitter in 2024 as well, gold price is likely to touch Rs 70,000 per 10 grams in the domestic market on the back of a stable rupee, geopolitical uncertainties and slowing global economic growth, according to experts.

Currently, the yellow metal price is hovering at Rs 63,060 per 10 grams on the commodity stock exchange MCX and around USD 2,058 an ounce in the international market at a time when the rupee is trading above 83 against the US dollar.

In early December, prices skyrocketed again on global tensions in the Middle East, and emerging market participants anticipated that the rate hike cycle has more or less ended.

While the gold price remained volatile this year, it reached a new high of Rs 61,845 per 10 grams on May 4 in the domestic market and USD 2,083 an ounce in the global markets. Later, the yellow metal touched a record high of Rs 61,914 per 10 grams on November 16, Commtrendz Research Director Gnanasekar Thiagarajan told PTI.

In a reflection of its safe-haven appeal, he said, gold touched an all-time high of Rs 64,063 per 10 grams and USD 2,140 an ounce on December 4.

"We expect an eventual rise to USD 2,400 in 2024, and if the rupee is to be stable, gold is likely to reach around Rs 70,000 levels. As India faces elections, the rupee could weaken as Foreign Institutional Investors (FIIs) are expected to lighten up their portfolios, which could further bolster domestic prices for gold," he said.

Kotak Securities Vice President - Head Commodity Research Ravindra Rao said retail jewellery buying might face headwinds from higher domestic prices in India and China while central banks' demand might exceed last year's record if the current momentum continues.

Rao noted that robust central bank buying alongside solid bar and coin demand helped gold prices amid surging bond yields and a strong US dollar throughout the year, as the US Federal Reserve raised the interest rates to a 22-year high.

"The central banks' buying has turned out to be a major demand driver for physical gold since the last few quarters. Record high domestic prices and uneven monsoon weighed on Indian jewellery consumption while the Chinese economic downturn led to an increase in the jewellery demand from the top consumer nation," he said.

On the price front, Rao said Comex gold has once again taken resistance near USD 2,080-2,090.

Even though rates might stay higher for some time, the current geopolitical environment, slowing global growth, and economic uncertainties further increase the appeal of the yellow metal, he added.

All India Gem and Jewellery Domestic Council (GJC) Chairman Saiyam Mehra said the volatility in gold prices impacted sales, and in spite of 30-35 lakh weddings, the business will be the same as in 2022.

"With the US Fed reducing rates, and continuing geopolitical tensions, the weak rupee will further boost gold prices, which is likely to touch USD 2,250-2,300 and Rs 68,000-70,000 in 2024. The high prices will impact sales further in 2024, and the business is likely to remain at the same level as 2023," he said.

World Gold Council Regional CEO Somasundaram PR said gold prices touched historic highs globally during the year due to various factors that accentuated its role as a safe haven and hedge against inflation.

In the September quarter, gold price was 12 per cent below last year.

However, demand for 2023 will be marginally below the last year at 700-750 tonnes, though the value of investments in gold will be higher, he said.

According to him, the redemption of the first tranche of sovereign gold bonds in November at a CAGR (Compound Annual Growth Rate) in excess of 12 per cent has also added to the attraction of gold among the investor community and strengthened conversations around gold as a portfolio diversifier in these uncertain times.

"In 2024, apart from the economic developments, the trajectory of gold prices will be largely dependent on the dollar index and geopolitical situation," he said.

Gem Jewellery Export Promotion Council (GJEPC) Chairman Vipul Shah said 2023 was a tough year for the exporters, mainly due to a decline in demand in the key markets following a rise in interest cost, geopolitical issues and China continuing to remain closed even after Covid.

"However, the situation has started to improve, and we expect things to improve in 2024, as interest rates are expected to come down, and we hope geopolitical issues will be resolved, boosting the global economy. We also expect the China market to open after remaining closed for a long period," he added.