Gold Hits ₹90K, But 40% Crash Predicted—Will the Bubble Burst?

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Gold has recently reached unprecedented levels—24-carat gold in India is trading around ₹90,000 per 10 grams, while international prices have crossed $3,100 per ounce. But the rally may not last long. In a surprising forecast, investment research firm Morningstar warns of a potential 40% decline, bringing gold prices down to approximately ₹55,000 per 10 grams.

🏦 Mixed Signals from the Market

While Morningstar sees a sharp correction ahead, other major financial institutions are painting a bullish picture.

Goldman Sachs projects gold prices could rise to $3,300 per ounce by the end of the year.
Bank of America expects prices to go even higher—to $3,500 within two years.

📊 What’s Fueling Morningstar’s Pessimistic Outlook?

According to Morningstar’s senior strategist, a combination of factors could trigger a steep price correction:

Overwhelming Supply: A spike in gold mining output and increased circulation of recycled gold has flooded the market, weakening prices.
Dwindling Central Bank Demand: Despite central banks purchasing over 1,000 tonnes of gold last year, a World Gold Council survey reveals that 71% of them intend to reduce or hold steady on their gold reserves.
Mergers and ETF Trends: The gold sector has seen a 32% rise in mergers and acquisitions in 2024, a sign of potential saturation. Meanwhile, the growth in gold-backed ETFs echoes patterns observed before previous market corrections.

⚠️ What This Means for Investors

With predictions swinging between bullish and bearish, investors must tread carefully. Morningstar anticipates a steep fall to $1,820 per ounce, while others predict continued highs. This divergence points to a potentially volatile phase in the gold market.