Gold prices surged to 39 new all-time highs in dollar terms in 2024 till October, the highest number of record highs in 45 years. In 1979, gold prices had scaled 57 new all-time highs, showed the World Gold Council (WGC) data. In India, gold prices rose to Rs 78,500 per 10 grams from Rs 950 per 10 gm during this period, according to traders.
In the first 10 months of 2024, gold appreciated by 23.5% in the country. India depends on imported gold and the exchange rate influences the price of the precious metal. On Monday, gold was trading at Rs 77,027 per 10 gm in the physical market, excluding a 3% goods and services tax.
The all-time highs in gold prices in 2024 are closely followed by those in 1972 and 2011, when the precious metal peaked 38 times. This year, March, September and October saw the largest number of new highs in gold prices, said Johan Palmberg, senior quantitative analyst at WGC.
Gold has had a stellar year as one of the best-performing assets in 2024. The price was boosted by central bank buying fervour, resilient-to-strong Asian demand including Chinese bar and coin buying and Indian buyers taking advantage of import duty cuts. Geopolitical tensions – from significant elections to conflict in West Asia – encouraging buying and restraining the selling back of gold also resulted in prices moving northward, said analysts.
Gold made further gains in October, smashing previous record highs to finish up 4% at $2,734 per troy ounce. On October 30, the price of gold in India touched its peak at Rs 79,681 per 10 gm, the second day of Dhanteras.
A risk premium ahead of the US presidential election was also a likely driver of gold prices in October. Global gold exchange-traded funds saw further inflows in October, led by the US and China.
Surendra Mehta, national secretary of India Bullion & Jewellers Association, said, “When the price of gold rises higher than inflation rate, it means the real value of return in gold is higher than in other asset classes. However, this would reduce the purchasing power of the people, which would directly affect gold consumption. Investment demand for gold will go higher in this sort of scenario. Jewellers will have to rework their strategy and start selling jewellery as an investment item rather than a consumable item. Selling jewellery as an asset class will be the key for the future.”
Gold prices have fallen 1.87% in the domestic market since the outcome of the US presidential election and the Federal Reserve’s decision to cut the rate by 25 basis points, which augurs well for families that have weddings in November and December.
A basis point is a hundredth of a percentage point.
“Since all major events are over, gold prices may take a little rest. This is a temporary phenomenon. However, there is buying opportunity at every dip and it is expected that gold price will hit $3250 per troy ounce by March 2026,” Mehta said.
Colin Shah, managing director at Mumbai-based Kama Jewelry, said. “We are currently in a low-interest regime, after two straight cuts announced by the US Fed, and the Reserve Bank of India is expected to cut rates next month. This will fuel a gold price rally. The geopolitical tensions are expected to support the yellow metal further. In the long term, gold prices will touch $3,000 globally, and Rs 86,000 per 10 gm in the domestic market.”
