As festival season unfolds, gold prices have soared beyond ₹80,000, raising questions about future trends and past values.
The price of gold in India has been on a steady rise, currently exceeding ₹80,000 for 10 grams of 24-carat gold. This surge in price has sparked predictions that gold could soon breach the ₹200,000 mark. Gold is considered one of the most valuable household assets for Indians, known for delivering attractive returns over time, contributing to its popularity among consumers.
According to the India Bullion and Jewellers Association (IBJA), gold prices hit an all-time high of ₹80,330 per 10 grams on October 21 of this year. Just earlier in the year, on April 18, the price was ₹73,477 per 10 grams, indicating a threefold increase over the past nine years, compared to just ₹24,740 in 2015.
Historically, gold prices have seen significant fluctuations. On March 3, 2006, 24-carat gold was priced at a mere ₹8,250 per 10 grams. The price reached three times that amount over the next nine years. Similarly, on March 31, 1987, gold was sold at ₹2,570 per 10 grams. It took nearly 19 years for gold prices to triple from that point, while previously, it took between eight to six years for such increases.
Future Predictions and Market Trends
Currently, if gold prices continue to rise at the same pace, experts predict that they could reach approximately ₹240,000. This projection suggests that gold could be selling for that price within the next six to nine years. Multiple factors have contributed to the sharp increase in gold prices, with geopolitical tensions being a primary driver.
Jatin Tribedi, Vice President of LKP Research, stated, “Whenever there is conflict or geopolitical uncertainty anywhere in the world, gold prices tend to rise. We are witnessing that reflection now.” Following the Russian invasion of Ukraine in 2022, which created instability in Eastern Europe, and ongoing conflicts involving Israel and groups like Hamas and Hezbollah, the price of gold has been significantly affected.
Experts argue that such events have historically impacted gold prices. They point out that the value of the Indian Rupee has also decreased, compounded by geopolitical tensions, pandemics, and wars across different regions of the world. Tribedi noted that in just 3.3 years, gold prices have risen nearly 75%, jumping from ₹40,000 to over ₹70,000.
Looking back, in 2014, the average gold price was around ₹28,000. By 2018, this figure increased to ₹31,250, marking a 12% increase during that timeframe. Tribedi further mentioned, “If the current trend continues, gold prices could triple within 7 to 12 years, reaching between ₹200,000 to ₹250,000 for 10 grams.”
Some experts are even predicting that gold could reach this price range sooner, potentially within the next six years.
Surendra Mehta, National Secretary of IBJA, emphasized, “The situation is already complex due to the Russia-Ukraine war and conflicts in West Asia. If tensions escalate between China and Taiwan, it could also impact gold prices.”
The Role of Inflation and Central Bank Purchases
Furthermore, rising inflation is closely tied to gold prices, which are currently at a high level. Financial analysts believe that as long as inflation continues to rise, gold prices will follow suit. “As inflation rates increase, currency devaluation occurs, making it harder for people to purchase goods with cash. This leads investors to turn to gold, raising demand and consequently driving up prices,” explained Mehta.
Additionally, central banks in several countries, including Russia, China, and India, have been persistently purchasing gold, further supporting its price increase.
Mehta remarked, “Gold was once seen as a luxury item, but it has transitioned into a significant investment medium for the general public in India.”
Experts believe that now is an ideal time to invest in gold, whether through jewelry purchases or gold bonds. It is essential for consumers to check for hallmarks when buying jewelry to ensure authenticity and value.
Key Takeaways
As we navigate through this volatile market, the continued interest in gold as an investment may be driven by economic uncertainty and shifting consumer sentiments.