Gold gains 21% in 2024: Can it continue to glitter with double-digit gains next year too?
Amid rate cuts and continuing geo-political tensions, gold prices shone with 21 per cent gains on the MCX, while internationally it delivered as much as 27 per cent gains in 2024.
Gold futures on the last trading day of 2024 continued to gain and topped levels of Rs 76,568 at the day's high. At the time of writing this copy, gold Februrary futures traded higher by 0.29 per cent or Rs 224 at Rs76,484 per 10 gm. So, after record gains in the bullion-to the tune of 27 per cent internationally and 21 per cent on the MCX, will gold prove to be lucrative going ahead too?
Gold price gains a hefty 21 per cent in 2024
Gold price on the MCX has gained a sharp 21 per cent after taking into account the 9 per cent duty adjustment.
Geopolitical tensions, central bank purchases, Fed rate cut among key triggers
Kedia Advisory report attributes gains to geopolitical tensions like the Israel-Gaza and Russia-Ukraine conflicts. Fed rate cuts and record central bank purchases. Also, import duty reduction in the domestic markets boosted demand.
Will upward rally sustain in gold in 2025?
Ajay Kedia of Kedia Advisory said that while in the first half we may see an upside of up to 12-13 per cent, second half of 2025 is likely to see big correction after record run in the bullion.
Kedia anticipates rate cut to pause going ahead
While rate cut in the economy is positive for gold as it lowers the opportunity cost of holding non-interest yielding bullion, central bank resorting to a rate cut pause in due course in 2025 may also lead to a correction in gold. Also, dollar has been picking stregth which may also keep a check on gold prices.
Gold price target for 2025
For 2025, Kedia projects a target of Rs 85,000 per 10 gm on the higher side, with the support placed at Rs 67,000 per 10 gm.
Points that suggest caution
For the bullion, there are a few cautious points to take note of including the Fed's hawkish stance, with only two 25 bps rate cuts against the expected 4 cuts earlier in 2025.
Additionally, gains in the US dollar and treasury yield will also deter gold price hike.
World Gold Council also predicts a slower price increase for gold
World Gold Council also predicts a slower price increase for gold amid stable environment. Also, a rebound in global economic growth is seen to dampen gold's appeal as a 'safe-haven'.