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Gold Price Drop: Will Rates Fall to 1.25 Lakhs Ahead of Wedding Season? Read Expert Forecast
- •Gold prices have witnessed a significant correction, dropping nearly 27 percent from January highs in the international market.
- •On the MCX, domestic gold prices have come down by more than 10 percent compared to their peak in August.
- •Profit-booking, US inflation concerns, rising bond yields, and a stronger dollar are the main drivers behind the recent decline.
- •Experts state that the probability of gold prices plunging to Rs 1.25 lakh or Rs 1 lakh is currently extremely low.
- •The upcoming festival and wedding season in India is expected to boost gold demand and somewhat limit the domestic price drop.
Key Questions Answered
Several global developments are responsible for the recent drop in gold prices, including profit-booking by investors after record highs and concerns regarding US inflation and interest rates. Additionally, a sharp rise in the real yield of US bonds made non-interest-bearing gold less attractive, while a stronger US dollar also pushed international prices down.
Experts state that while a short-term correction is possible, dropping to Rs 1.25 lakh per 10 grams is not the current main forecast. For that level to occur, US 10-year Treasury bond yields would need to surge further and October inflation would need to significantly exceed expectations, a scenario currently deemed unlikely.
Gold price drops in India may remain somewhat limited due to fluctuations in the exchange value of the rupee against the US dollar. Furthermore, the arrival of the festival and wedding season is anticipated to boost local demand, which can help cushion the domestic market against steeper declines.
