Gold prices may decline by up to 7% before the next rally

• Gold prices have hit a new all-time high at ₹78,450 per 10 grams.
• Motilal Oswal in a report has said that gold will see a correction ranging from 5 to 7%.
• Over the next 2 years, gold will hit the levels of ₹86,000 per 10 grams.

Gold prices could see some consolidation near the recent highs, Motilal Oswal said in a report as its prices hit a fresh all-time high of ₹78,450 per 10 grams.

The wealth management firm said that gold will see a correction ranging from 5 to 7% as historically, it has never added gains of 32% in any year since 2000.

"We expect gold to correct by 5-7 per cent, before the next leg up," the report added.

As per the report, gold will hit the levels of ₹86,000 per 10 grams over the next 2 years.

Gold prices are on an upward trajectory backed by firm demand, and the steam seems to remain till the end of this festival season.

As per the report, the US presidential election next month could add further volatility to the market. The domestic exchange-traded fund (ETF), imports SPDR Holdings and CFTC positions are supporting the case for Bulls.

Citing major reasons behind the recent surge, the report mentions that in the 9 months of 2024, the US Federal Reserve's stance and geopolitical intentions have pushed gold prices around the globe.

Going further, it adds that gold buying from the central bank, and festive and wedding-related domestic demand will boost the sentiments in the market.

As per the various reports and experts, the rural demand, in particular, is showing signs of recovery. With an improved monsoon season and higher crop sowing this year, rural economic conditions are set to strengthen, which is anticipated to drive increased gold purchases, especially during the festive period.

Gold demand in India has remained robust, particularly following an initial surge after the import duty cut.

Indian gold exchange-traded funds (ETFs) have witnessed a surge in investor interest since the import duty cut and changes to long-term capital gains tax for gold ETFs were announced in the Union Budget.

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