Gold prices in India maintained its shine during the financial year 2023-2024 driven by escalating geopolitical crises worldwide. Volatility in the yellow metal prices also remained high led by slowing growth in advanced economies and monetary tightening by global central banks amid high inflation.
Gold has historically been viewed as a safe-haven asset as investors tend to flock to it during times of economic uncertainty or geopolitical instability. This is because gold is seen as a store of value and a hedge against inflation and currency depreciation.
Several geopolitical factors contributed to a rally in gold prices. MCX gold price rallied more than 12% in FY24, from around ₹59,400 per 10 grams at the beginning of the year to around ₹67,000 per 10 grams at the end. The fiscal year saw a slew of global conflicts including the Israel – Hamas war and the ongoing Russia – Ukraine war.
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FY24 also witnessed global central banks shoring up their gold reserves with physical demand also remaining elevated. The global gold demand rose to an all-time high of 4,899 tonnes in the calendar year 2023 supported by over-the-counter purchases and robust buying by central banks.
Meanwhile, according to the World Gold Council (WGC), gold demand in India is expected to jump to 800-900 tonnes in the calendar year 2024 on the back of robust economic growth and higher income. This has lifted the prospects for gold prices in FY 2024-2025.
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“The yellow metal has advanced for yet another financial year amid an upbeat undertone. The key behind the rally is the rise of the geopolitical risk, be it Hamas & Israel or Russia – Ukraine. The central banks have consistently bought gold. The dollar index has been sluggish in the last year,” noted Jigar Trivedi, Senior Research Analyst – Currencies & Commodities, Reliance Securities.
Trivedi expects the same bullish undertone in the gold prices to continue in the coming financial year too.
In FY25, the global landscape is poised to witness a series of significant political events, marked by elections in several major economies. Among these, elections will be held in India, the United States, the European Union, and the United Kingdom.
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These events will likely shape the political direction and policies of these key players on the world stage, influencing economic and geopolitical dynamics both regionally and internationally.
“Moreover, although the war premium has been reduced, we cannot rule it out completely. Most importantly, the central banks will decide the rate cut trajectory this year. However, there is still uncertainty regarding the timing of the rate cut cycle. So, that’s yet again a bullish trigger,” Trivedi said.
Hence, he believes the outlook for bullion prices is positive.
According to Trivedi, Comex gold price can climb to $2,300 per ounce, while there is a possibility of MCX gold touching ₹69,000 – ₹70,000 per 10 grams in the next financial year (FY25).
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
