Even as gold prices soar to record levels, crossing ₹90,000 per 10 grams in India and $3,100 per ounce globally, a stark warning from investment research firm Morningstar has caught the attention of investors. The firm has forecasted a potential 40% decline in global gold prices, which could drag Indian rates down to around ₹55,000 per 10 grams in the near future.
Morningstar’s Bearish Gold Outlook: What’s Behind the Prediction?
Morningstar’s senior strategist projects that international gold prices could drop to $1,820 per ounce, citing multiple economic and market trends that could trigger a steep correction. Here are the key reasons:
🔸 Rising Gold Supply
Increased global mining output and a surge in recycled gold are contributing to a supply glut, putting downward pressure on prices.
🔸 Weakening Institutional Demand
While central banks purchased over 1,000 tonnes of gold in 2024, that momentum may not continue. A World Gold Council survey suggests that 71% of central banks plan to reduce or maintain their current gold holdings, hinting at a demand slowdown.
🔸 Market Saturation & M&A Activity
The gold industry witnessed a 32% increase in mergers and acquisitions in 2024, often a sign of consolidation before a correction. Meanwhile, the rise in gold-backed ETFs is beginning to mirror historical trends seen ahead of past price declines.
Contrasting Views: Not Everyone Predicts a Fall
While Morningstar expects a significant drop, other major institutions remain bullish:
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Bank of America has projected gold could reach $3,500 per ounce in two years.
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Goldman Sachs sees prices touching $3,300 per ounce by year-end.
These opposing forecasts reflect the uncertainty in global economic indicators, including inflation, interest rates, and currency movements.
What Should Gold Investors Do Now?
With predictions ranging from sharp declines to new all-time highs, the gold market is clearly entering a volatile phase. Experts suggest that investors:
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Track central bank policy and inflation expectations closely.
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Monitor supply-demand changes, especially from emerging markets.
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Diversify portfolios to hedge against both upward and downward price swings.
Bottom Line
Whether gold prices will fall dramatically as predicted by Morningstar or continue climbing as others believe, one thing is clear: uncertainty is high, and timing will be critical for investors navigating the precious metals market in 2025.
