The price of gold has seen an increase of 75 percent in the last 3.3 years. At the same time, gold prices have increased three times in the last 9 years. In such a situation, the question has now arisen that when will the price of gold reach Rs 2 lakh i.e. 3 times the current level. The question is certainly a bit complex, but some effort has been made to find its answer. Let us tell you also.
Even though there has been a decline in the price of gold in the last two days, it is one of the most favorite assets for the people in India. Which has given tremendous returns to the people in the last few years. According to India Bullion and Jewelers Association (IBJA), the price of 10 grams of 999 gold is going to reach Rs 74,000. On April 18, 2024, the price of gold had reached Rs 73,477. In about 9 years, there has been a 3 times increase in the price of gold.
In the year 2015, the price of gold was Rs 24,740 per 10 grams. Earlier, in 2006, the price of gold was Rs 8,250. This means that in 9 years the price of gold has increased by almost 3 times. Earlier, it had taken almost 19 years for the price of gold to triple from Rs 2,570 per 10 grams in 1987.
Earlier, the time taken for the price of gold to triple was about 8 years and 6 years respectively. Now the biggest question that has arisen at present is that when will the price of gold reach 3 times the current level i.e. Rs 2 lakh. Let us tell you also.
If we talk about three times increase from the current level, then gold will reach Rs 2 lakh per 10 grams. But the important question is how much time will it take for the price to triple this time. Let us also try to tell you how much time it may take for the price of gold to reach 3 times the current level.
When can gold reach Rs 2 lakh?
Jatin Trivedi, VP Research Analyst, LKP Securities, said in a media report that gold prices rise more when there is great tension in any corner of the world or when there is uncertainty. Such gold prices will be influenced by how the current issues unfold. Historical data suggests that major global changes, such as geopolitical tensions and economic crises, can significantly impact gold prices, leading to large price increases in a short period of time.
Anuj Gupta, Commodity and Currency Head, HDFC Security, says that in the last 5 years, along with the weakness of the rupee, geopolitical issues and epidemics have also been seen. All these together increased the price of gold from Rs 40,000 to more than Rs 70,000. If we look at the gap of last 3.3 years, there has been an increase of 75 percent in the price of gold. In the year 2014, the price of gold was seen at Rs 28,000. In the year 2018, the price of gold came to Rs 31,250.
During this period, an increase of only 12 percent was seen in the price of gold. Trivedi says that in the last 9 years, there has been a 9 times increase in the price of gold. The possibility of this happening again cannot be ruled out. Looking at recent trends, it is likely that gold prices may reach Rs 2 lakh within the next 7-12 years.
On the other hand, Surendra Mehta, National Secretary of India Bullion and Jewelers Association, says in the media report that after Ramadan, increasing geopolitical tension between Iran and Israel and China-Taiwan tension can also create a situation of uncertainty. These two factors, apart from heavy paper trading of gold in SGE and COMEX, are a cause for concern, due to which we are already seeing gold prices at all-time highs. He said that due to these uncertainties, gold prices may triple in the next 6 years, which will lead to de-dollarization.
Vikram Dhawan, Fund Manager and Head Commodities, Nippon India Mutual Fund, said in a media report that, however, there is only one example of a 3-fold increase in the price of gold in 19 years. This is an indication that no tenure can be taken lightly. Like any other asset, gold also goes through boom and bust phases. Unless there is a better alternative, gold will remain bullish. He says that the demand for gold among consumers and investors is very high. Due to which better returns are expected.
Role of inflation in gold price
Harsh Gehlot, co-founder and CEO of FinEdge, said in a media report that gold is considered one of the best assets against inflation. The price of gold is directly related to inflation. Inflation is at its peak all over the world. It will take time to calm down. As long as inflation figures remain high, gold prices will continue to receive support and will show an upward trend in the future.
The direction of inflation will also decide how quickly gold prices will rise. Harish V, Commodity Head, Geojit Financial Services, says in a media report that there is often a complex relationship between inflation and gold prices. Gold is often seen as a hedge against inflation because during inflation the value of gold remains stable or even increases.
This will also affect prices
Harish of Geojit Financial Services says in media reports that the supply of gold has remained stable and any increase in demand is likely to increase prices in a short period of time. The total supply of gold is quite limited, which is one reason why this metal is considered a precious asset. The supply of gold comes from two main sources – mining and recycling. The volume of new gold mined every year is stable. The remaining demand is generally met by recycling scrap gold.
According to experts, there is a continuous increase in the demand for gold from the central banks. Due to this the prices may increase further. Central banks of some countries are buying more and more gold to increase their holding. Which includes countries like Russia, China, India. Since the supply of gold is limited, this increase in sovereign treasury holdings will keep pressure on the supply and will continue to support gold prices. Experts say that the pressure on the supply side does not seem to be reducing. The main reason for which is believed to be geopolitical tension. At such times, investors prefer to go towards safe haven.
Jewellery, which was traditionally one of the most sought after assets, is now unlikely to do so in the future. However, the demand for bullion is expected to increase. In the media report, Surendra Mehta says that in a country like India, gold is rapidly converting from a consumption item to an investment item.
These can also be the reasons
The changing global system can leave a long-term impact on gold price fluctuations. A downgrade in America’s credit ratings, whether real or perceived, could send gold on a multi-decade high. Competitive currencies devaluation due to re-globalization as well as trade disputes are also favorable for gold prices.
Large and wealthy emerging economies like India, which have a cultural affinity for gold, could significantly increase gold consumption, leading to higher prices. If the price of gold continues to rise at present then it may see an increase in the coming days also. Gold can also see support due to any kind of war or geopolitical tension or the dollar coming under pressure.