Global uncertainties have driven gold prices to fresh lifetime highs, after taking the rally in the precious metal took a breather over the past few sessions. A weaker dollar, trade war tensions and concerns over global economic growth due to U.S. President Donald Trump's tariff plans led to safe-haven inflows, propelling prices.
With the price of gold hitting Rs 95,000 per 10 grams in the local commodities market, it is just 5% away from the psychological barrier, Rs 1 lakh. Can the trend of continued tariff turmoil roiling investor sentiment and boosting the demand for the safe haven asset, keep the precious metal soaring?
Bulls and bears are divided on the outlook for the commodity.
Ahead of U.S. President Donald Trump's tariff announcement, the price of gold was on an uptick, led by heavy central bank buying and fears of retaliation from key trading partners and the potential for a full-blown trade war boosted safe-haven demand, limiting losses. Investors had also shifted their preferences to physical gold deliveries, instead of cash settlements amid concerns that tariffs could disrupt shipments.
According to experts, going ahead, the price of gold is likely to soar further, with Bank of America analysts estimating that COMEX gold prices could reach $3,500 per ounce in the next two years, while Goldman Sachs expects gold at $3,300 per ounce towards the end of 2025.
Risky assets such as equities, bonds and currencies have seen wide-spread sell-offs, further propelling gold prices to shoot up. However, as the value of gold soared, some experts believed that the asset has been significantly overbought and is poised for a correction.
Sharing an incredibly bearish outlook, research firm Morningstar believes that gold prices could see 40 percent in value eroded over the next few years. From the current price, a Morningstar analyst sees gold near the $1,820 mark. If this fall were to be replicated domestically, it would lead to gold prices falling to the Rs 55,000-Rs 56,000 per 10 grams mark. This is assuming the value of the rupee against the dollar continues to beat the current level of Rs 85.5.
According to Morningstar, the increased supply of gold would lead to a drop in prices, as demand would fail to keep up. Due to the rising lucrativeness of mining for gold, countries across the globe have ramped up production, while gold recycling has also risen.
Further, the research firm believes that central banks are likely to decrease their relentless buying of gold. Investor appetite is also likely to dip given that concerns about the economy are typically short-term factors that influence gold prices, said the Morningstar report.
Patel dismissed the report. “A 40 percent fall in gold prices will only happen if there aren’t any trade wars, the global economy is expanding, equity markets are at all time high and there aren’t any geopolitical concerns. Currently, we don’t see such a scenario playing out.”
Going ahead, Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities stated that the broader sentiment remains bullish, considering the sharp 8 percent rally in domestic gold prices from Rs 87,000 since April 7, 2025. "With risk appetite still cautious and investors closely tracking global developments, volatility is expected to persist," he added.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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