Gold prices may soften mid-term if global risks ease, says World Gold Council

Gold price may experience e mid-term weakness if geopolitical and trade risks globally ease, or higher opportunity costs if the US dollar and Treasury yields rise, according to a report released by the World Gold Council. Slowing central bank gold purchase and retail investment demand could also lead to mid-term gold price adjustment, WGC added.

Gold prices were hovering around Rs 97,511 per 10 gm last Friday.

Gold’s recent bull run has attracted tremendous attention. After bottoming on 3 November 2022, the gold price has more than doubled from US$1,429/oz to US$3,287/oz, equivalent to a 30% compound annual growth rate.This has been supported by consistent central bank purchases as well as soaring geopolitical and, more recently, trade risks; all this has dwarfed the negative impact from rising real rates amid rate hikes by central banks and cooling inflation between November 2022 and August 2024.

As the gold price has continued to break new highs, investors have become wary of potential risks. And we have studied previous bear runs for gold and analysed the factors that could lead to mid- or longer-term pullbacks, based on historical patterns.

"While we don’t consider these likely, longer-term pullbacks could come from more persistent and structural demand shifts which may lead to notable declines in gold’s investment demand from both institutions and retail investors as well as rapid rises in supply." WGC said in the report.