In light of recent geopolitical tensions and market fluctuations, experts from Angel One predict a potential correction in gold prices, forecasting levels of $2,600 per ounce internationally and approximately ₹75,000 per 10 grams in India within the next two weeks. Current gold prices, at historic highs, present a less favorable risk-reward ratio for investors, prompting a recommendation to hold off on purchases until a more advantageous opportunity arises.
Recent Market Dynamics
Between September 30 and October 4, 2024, gold prices experienced significant volatility due to various geopolitical events. On the international front, gold traded within a range of $2,620 to $2,685 per ounce. Simultaneously, the Multi Commodity Exchange (MCX) in India saw prices fluctuate between ₹75,500 and ₹76,500 per 10 grams, reflecting a range of approximately ₹1,000 during this period.
Geopolitical Influences on Gold Prices
The ongoing conflict between Israel and Iran poses serious risks to global oil supplies and could potentially disrupt the economic landscape further. The Strait of Hormuz, a critical passageway for 20% of the world’s oil, faces threats of disturbance, which could result in inflationary pressures in an already sluggish global economy.
Iran’s oil exports, estimated at 1.6 to 1.7 million barrels per day, are also vulnerable. Key export terminals, such as Kharg Island and Sirri Island, could be targeted, affecting both oil and gas supplies, including the significant Tabriz-Ankara pipeline that transports natural gas to Turkey.
Historical Highs in Indian Gold Markets
As of October 4, 2024, gold prices in India reached an all-time high of ₹76,190 per 10 grams. This surge is attributed to a blend of global market trends, geopolitical uncertainty, and the anticipated US Federal Reserve rate cuts. Increased demand, driven by safe-haven buying and the upcoming festive and wedding seasons, further supports high prices.
In addition, there is growing interest in gold ETFs. In July 2024, investors channeled ₹1,337.4 crore into gold ETFs, marking the highest inflow since August of the previous year. As of August 2024, the total assets under management for gold ETFs in India surged to ₹37,390 crore, reflecting a 68% increase year-on-year as investors seek efficient ways to invest in gold without the burdens of physical storage.
Global Gold ETF Trends
Globally, strong gold prices have encouraged increased investment in gold ETFs. August saw an inflow of $2.1 billion into physically-backed gold ETFs, continuing a four-month streak of positive net inflows. Overall holdings reached 3,182 tons, with Asia leading in investment, attracting $3.5 billion, while Europe and North America faced outflows.
Future Outlook for Gold Prices
Given the current historic levels of gold prices, a correction appears imminent. The interplay of geopolitical events, central bank purchasing, and increased interest in gold ETFs suggest that while gold has seen unprecedented highs, it cannot sustain such growth indefinitely.
Experts project a potential decline towards $2,600 per ounce in international markets and ₹75,000 per 10 grams in India. Therefore, investors are advised to remain patient and await this correction to seize more favorable buying opportunities in the precious metal market. The current pricing does not present an optimal risk-reward scenario for immediate investment.
