Forecasts indicate that gold prices could once again fall below Rs 80,000 per sovereign. But why is a decline expected, and what do the experts say? Let’s take a closer look.
Gold has been climbing steadily, reaching levels that many ordinary buyers can no longer afford. Some projections even suggest this may not be the peak, with prices potentially doubling in the future, a prospect causing concern for many. Why has gold become so expensive? Analysts attribute the sharp surge to global economic instability and the large-scale stockpiling of gold by governments worldwide.
As a result, gold prices, which had been rising rapidly since last September, reached a historic high on January 29, with one gram priced at Rs 16,800 and one sovereign at Rs 1,34,400. However, on January 30, the price dropped suddenly by more than 10%, and over the past 15 days, it has fluctuated significantly.
Amid this uncertainty, there is encouraging news for prospective buyers. Reports suggest that gold prices could fall below Rs 80,000 per sovereign. Analysts note that while Russia was a major factor behind the earlier surge, it may now be contributing to the decline.
According to experts, the conditions that drove prices higher over the past six months have shifted, creating room for a potential correction. Due to tensions with the United States, Russia had been limiting its use of the US dollar in international trade. However, recent reports indicate that Russia may be prepared to resume full use of the dollar.
As the United States attempts to pressure Russia’s economy through various measures, including efforts to curb India’s crude oil imports from Russia, Moscow is believed to be reconsidering its strategy. Analysts suggest that if Russia begins selling its gold reserves to secure dollars, global gold prices could drop sharply. Experts also believe that if the Russia-Ukraine conflict ends following a US-Russia trade agreement, prices may decline further. Although such reports have emerged, the Russian government has not issued a formal denial, lending credibility to these predictions.
If Russia resumes widespread use of the US dollar, its stability could improve, potentially prompting BRICS nations to follow suit. In recent months, countries such as China, India, Brazil and South Africa have reportedly increased their gold purchases in response to former President Trump’s tax policies. However, there are indications that they may now scale back these purchases.
Over the past six months, BRICS countries accounted for around 50% of global gold purchases. Should they reduce demand, prices are likely to soften. In light of this, Bloomberg has projected that gold prices in India could fall to between Rs 70,000 and Rs 80,000 per sovereign.
Analysts caution that any decline is expected to be gradual rather than sudden. By the end of 2027, the price of one sovereign of gold could stabilise at around Rs 80,000.
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