The gold market in India maintained its robust performance throughout the financial year 2023-2024, buoyed by escalating geopolitical tensions worldwide. Volatility persisted in gold prices, primarily driven by sluggish growth in advanced economies and the tightening of monetary policies by global central banks amidst elevated inflation levels.
During FY24, gold prices on the Multi Commodity Exchange (MCX) surged by over 12%, soaring from approximately Rs 59,400 per 10 grams at the commencement of the year to around Rs 67,000 per 10 grams at year-end. This period was marked by numerous global conflicts, including the Israel-Hamas war and the ongoing Russia-Ukraine conflict.
Gold continued to be sought after as a safe-haven asset, with investors turning to it during periods of economic uncertainty and geopolitical instability. Its reputation as a store of value and hedge against inflation and currency devaluation remained intact.
Global central banks bolstered their gold reserves, contributing to heightened physical demand. In 2023, global gold demand reached a record high of 4,899 tonnes, supported by over-the-counter purchases and robust acquisitions by central banks.
The World Gold Council (WGC) forecasts a surge in gold demand in India to between 800-900 tonnes in the calendar year 2024, driven by strong economic growth and rising incomes. This positive outlook has raised expectations for gold prices in the upcoming financial year 2024-2025.
Gold Outlook for FY25
Commenting on the gold outlook for FY25 Vishal Jain, CEO, Zerodha Fund house said that this year is addressed as the “Year of Elections” with more than 64 countries or approximately 50% of the world population going to the polls. Elections usually have a strong bearing on financial markets resulting in investors flocking towards safety. Thus, with continued central bank buying and uncertainties around economic and political developments in the coming quarters, Gold might be one of the favorable asset classes.
“Since the start of 2024, Gold has risen by approximately 6.2%, which is indeed a strong start and one of the reasons has been record central bank buying of Gold over the past two years. This particular development has given a strong impetus to Gold and one would assume this trend to continue,” added Jain
Commenting on the same Rahul kalantri VP commodities at Mehta equities said that looking ahead, there is optimism about gold’s long-term prospects, with a target price of $2,410 per ounce. However, in the short term, it’s advisable to be cautious and consider taking profits around the $2,280 level. In the Indian market, gold prices may reach 69,500-70,000 rupees due to the rupee’s weakness, but short-term investors are advised to consider taking profits around this level.