Gold, Guest Blog

Gold Prices: Prediction for the Future

Among all the investable assets, the gold market has always been the most mature one. Gold is one of the very few assets that are prone to high volatility or price swings. Gold, as in investment, has shown consistent value growth. These are just some of the reasons that gold has always been considered a haven.

The value of gold has been observed to be increasing day by day. That’s the reason gold has always been viewed as a valuable asset for thousands of years. In such a scenario, gold price prediction has become very critical. Gold price forecast helps investors invest when the market is low and make money by selling when the demand is high.

Gold Price Predictions 2022

Like other commodities, the price of gold is also covered under the universal law of demand and supply. Since the supply of gold is limited and the market is ever-increasing, it makes sense to track its movement. For the next few years, Gold price prediction can often give the investors a handsome return on their investment over the long term. 

Gold Price Future Prediction 2022

The entire globe is fighting against the Covid pandemic. With the outbreak of the pandemic in 2020, there was a high level of uncertainty everywhere. This impacted the global economy as well, and there was a massive demand for gold. During the last year, the gold price increased from Rs. 39,100 to Rs. 49,000 per 10 grams, which is a 25.6% growth on a YoY basis. In January 2022, the gold price averaged Rs. 49,500 per 10 grams, which is an increase of 0.46% over December 2021 prices. 

However, with increasing vaccination, the Covid-19 situation is improving, and the feeling of uncertainty is going down. Things seem to have improved, and the market appears to be picking up. According to the World Bank, the gold price forecast is that in the year 2022, the gold will average at around Rs. 46,120, which is lower than the average price of Rs. 47,050 in the year 2021.

Gold Price Predictions For Next 5 Years in India 

Experts agree that several factors will play a critical role in gold price prediction for the next five years. However, that’s where they stop agreeing with each other. There are varied and even conflicting views regarding gold price prediction in the next five years. 

Experts like Ole Hansen, Head of Commodity Strategy at Danish lender Saxo Bank, believe that gold will trade higher in the coming five years as the entire commodity market improves. The expected rise in inflation could further increase the demand and hence the price of gold. Inflation is expected to increase due to demographic changes. As the population ages, there will be fewer people who will work and demand higher wages. The global fight of preserving the climate will lead to the scarcity of many vital commodities. As a result, the gold price forecast is that the prices will say at a high level.

However, there is another view, which contradicts this bullish opinion. There are another set of experts who believe that gold will become weak after 2022. As per the gold price forecast by the office of Chief Economist of the Australian Government, the gold prices will be an average of 4.3% by 2023. This fall will be catalyzed by the global economic recovery and higher interest rates. 

The gold price forecast by the World Bank predicts the gold prices to fall continuously over the next five years. The price of 10 grams of gold will drop to about 45,480 per 10 grams in 2022, and Rs. 44,200 in the year 2023. The price is further expected to fall to Rs. 43,150 in 2024 and Rs. 42,100 in the year 2025.

According to Fitch Solutions, the gold price prediction for the coming years shows a downward trend. The gold price is predicted to average around Rs. 43,900, Rs. 43,000, and to Rs. 42,800 for the years 2023, 2024, and 2025, respectively. 

Gold Price Prediction in India: 2022 Long Term Views

Widening the scope further, gold future prediction for ten years and beyond, the gold price prediction for the long term seems promising. The general forecast is that the gold prices will go up in a long time, considering that there is a fear of a financial crisis, similar to the economic crisis of 2008. This fear of financial crisis will make people take preventive action to prevent their wealth. They are expected to invest more and more in gold, which will push its demand and cause an increase in gold prices.

This crisis, whose symptoms have already been felt in 2022, forced the central banks to increase currency printing even in 2021. This would result in banks increasing their gold reserves, thereby sparking a rise in gold prices. 

Reasons Behind the Increase in Gold Prices 2022

There are various reasons for the increase in gold prices. Some of the primary reasons are listed below:

Demand and Supply Situation: In the case of gold, the supply of gold from mines is more or less limited. However, during festivals and wedding season, the demand for gold goes up. This increase in demand for gold increases the gold prices.

Inflation: When inflation goes up, the value of currency decreases. Most investment options fail to offer a return that can beat inflation. Only gold can provide a hedge against inflation. So, whenever inflation is high, the yellow metal attracts investors more.

Interest Rates: The price of gold has an inverse relationship with interest rates. When the interest rates are low, people do not get good returns on their investments. They tend to withdraw their savings and buy more gold. This hikes the demand for gold and increases its price. The other side of the story is that people tend to sell their gold and invest in deposits when the interest rates rise. That decreases the demand and hence the gold prices.

Indian Jewellery Market: Weddings and festivals are big gold-buying occasions in India. During this time, the demand for gold and gold jewelry goes up. This increased demand results in increasing the price.

Gold Reserves Held by Government: The Reserve Bank of India has gold reserves on behalf of the Indian government. Depending upon government policies, the government may increase or decrease its gold reserves, conditions that impact the gold price in India.

Currency Fluctuations: US dollar is treated as the global currency. In the international market, gold is traded in USD. Whenever there is any fluctuation in the currency conversion rates, it affects the gold prices in India. 

Long-Term Gold Analysis for 2030

Though it is complicated to make a gold price prediction for such a long term, if one were to go by what experts say, the general view of most experts is that gold prices will continue rising. However, the speed of this growth is what differentiates one expert from another.

Gold Price Prediction Chart 2022

Gold Price Prediction Chart 2022

As one can see, the gold price prediction by most experts is above Rs. 53,000 per 10 grams in 2022. Two experts have made a gold price prediction for 2022 of about Rs. 50,000 per 10 grams of gold.