Gold prices have been on a strong rally, with forecasts indicating a potential rise to $3,300 per ounce, driven by central bank demand, geopolitical uncertainties, and macroeconomic factors.
Goldman Sachs has revised its year-end forecast to $3,100 per ounce, with a potential upside to $3,300 if policy uncertainties persist. The bank also raised its central bank demand assumption from 41 to 50 metric tons per month, citing fiscal risks and inflation concerns. UBS has also lifted its price target to $2,900 per ounce, with projections of $3,200 later this year due to liquidity constraints in the London market.
The yellow metal has gained over Rs 8,600 per 10 gram, or approximately 11%, in just over six weeks of 2025, following a 27% surge in 2024. On Tuesday, MCX gold futures hit a record high of Rs 86,360 before settling at Rs 85,532.
However, reaching Rs 1 lakh per 10 grams in the near term remains a challenging target, despite the bullish outlook.
The Indian scenario
Analysts expect further gains but believe the Rs 1 lakh mark would require an additional 16% rise, which may not materialise in the short term.
Geopolitical risks, particularly trade tensions and tariff threats, have strengthened gold’s safe-haven appeal. Market sentiment has been influenced by concerns over potential U.S. tariffs, Federal Reserve rate cuts, and fluctuating ETF flows. Despite these factors, some analysts argue that gold may face resistance beyond the Rs 87,000 level in the near term, given the scale of the recent rally.
While fresh highs are likely, sustained price growth depends on factors like the dollar’s movement, ETF flows, and policy shifts. Some analysts suggest that while the trajectory remains positive, achieving the Rs 1 lakh milestone in the next few months would require a confluence of strong catalysts, including further rupee depreciation and extended geopolitical risks.
Gold loans by commercial banks surged by 68% in the first nine months of FY25 due to rising gold prices. Non-bank lenders also saw a rise in gold loan sanctions. The increase in gold prices has allowed lenders to offer higher loan amounts due to higher collateral value, enhancing lender comfort despite regulatory scrutiny on gold loan portfolios.
Rupee depreciation remains a key factor for domestic gold prices, as a weaker currency raises the landed cost of imports. Additionally, any shifts in Federal Reserve policy or inflation trends could impact gold’s trajectory, either boosting demand or limiting further upside.While investors remain bullish on gold as a hedge against economic uncertainty, experts suggest a balanced approach. Staggered investments and diversification across asset classes may help manage risks in a volatile market. Although gold prices are expected to remain strong, achieving Rs 1 lakh per 10 grams in the coming months appears unlikely without significant additional catalysts.
