Gold prices remain in focus this festive season as investors track the precious metal's volatility ahead of the US Federal Reserve's interest rate decision later on Wednesday. International gold prices are holding above the key $4,000-an-ounce mark.
In India, gold has fallen nearly 20% from its record high of Rs 1,76,306 per 10 grams, hit on January 29, and is currently trading at around Rs 1,43,000 per 10 grams of 24-karat gold. Prices vary across cities, but the broader rate remains around Rs 14,000 per gram.
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In India, the upcoming festival of Diwali is an important occasion for buying gold. Every year on Dhanteras, Indians tend to buy gold as it is considered auspicious. As a result, demand for gold coins, bars and jewellery may pick up next week. However, the main speculation remains about whether prices will dip further from here.
Can Gold Prices Go Lower?
The US Fed is unlikely to raise rates in today's meeting. Though, if it signals a higher probability of future interest rate hikes, gold prices may dip in the coming days. Higher interest rates increase the opportunity cost of holding gold, as it does not generate interest or income. At the same time, rising rates can strengthen the US dollar, making gold more expensive for investors using other currencies. Consequently, investors may shift their money toward yield-bearing assets, such as government bonds. This can reduce demand for the precious metal.
Still, the current bearish outlook for gold does not mean that its long-term appeal will fade. Gold remains a critical investment tool and has historically delivered 10% returns annually.
According to Reuters, analysts and traders suggest a median gold forecast of $4,495 per troy ounce for 2026, which is lower than earlier estimates. However, they view that the 2027 forecast is expected to be around $4,650, with support from robust central bank purchases and physical demand.
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