Gold prices are expected to head south over the next couple of years with the improvement in global macro-economic situation.
“Though some support for gold may come from inflation at the global level (especially in Europe), gold prices are still expected to go down over the next 1- 2 years,” says WealthRays Securities Pvt Ltd in a report “Gold: Is it really worth investing in?”
As global inflation falls, the value of gold as a hedging instrument too falls against the rising prices, said SM Sakthi Prakash, Senior Analyst with the firm.
In the domestic market, gold prices could drop to levels of ₹24,000 for 10 gm. In fact, the firm sees this as the resistance point for gold.
“We predict gold to fall to levels of ₹24,000 as inflation heads lower with the improvement of economies in China and the US and the rupee strengthening against the dollar,” it said, adding that this could see emergence of retail demand at these levels.
The RBI will definitely try to keep inflation under control. Since Raghuram Rajan took over as the Governor last September, RBI has hiked interest thrice. Even in the latest policy statement, RBI did not cut rates, sending a clear message on its stand against inflation. “Thus the economy is expected to be stable which could keep gold prices down,” said the firm.
However, supply of gold in the country could improve with the Government easing import curbs, it said. On Wednesday, the Commerce Ministry pitched for easing the curbs on gold since its imports have dropped drastically.
On Thursday, gold ruled stable at $1,264 after gaining early this week from a drop in equities in the European market. In the domestic market, gold for jewellery (99.5% purity) quoted at ₹26,780.