New Delhi: If one were to go by the Economic Survey 2024-25, this might be the best year to execute your gold jewels buying plan. The survey has predicted that the precious yellow metal's prices are projected to decline in 2025 while silver prices may soar.
Economic Survey 2024-25 tabled in Parliament cited the World Bank's Commodity Markets Outlook for October 2024 to buttress its statement. It highlighted that commodity prices are projected to decrease 5.1 per cent in 2025 and 1.7 per cent in 2026, citing the outlook.
The projected declines, according to the report, are led by oil prices but tempered by price increases for natural gas and a stable outlook for metals and agricultural raw materials.
The section dealing with precious metals said gold prices are expected to decrease while silver prices may increase. Prices for metals and minerals are expected to decline, primarily due to a decrease in iron ore and zinc prices. "In general, the downward trend movement in prices of commodities imported by India is a positive for the domestic inflation outlook," it noted.
It observed that uncertainty in global markets has led to fluctuations in the composition of foreign exchange reserves, as central banks adjust their holdings to mitigate risks.
"A global rise in uncertainty has led to fluctuations in the composition of foreign exchange reserves. CY24 saw gold bullion holdings nearing their highest level since World War II, which was largely driven by an accumulation of gold by emerging market central banks," the noted.
It cited the higher global prices, early purchases ahead of festive spending and demand for safe-have assets as drivers of increase in gold imports.
Further, the International Monetary Fund (IMF) has noted steady changes are underway in the global reserve system, including a gradual movement away from dollar dominance and a rising role of non-traditional currencies, it said.
The survey, however, noted that the projected decline in gold prices have a bearing on investor sentiment and the expected rise in silver prices may offer some support to the bullion market.
As the government prepares for the upcoming fiscal year, it expects to closely monitor price movements of the bullion and their impact on inflation, trade, and foreign exchange reserves.
However, experts have a different view, as they don’t foresee any downward trend globally. They do believe that in India, if the government introduces certain measures in the budget, gold prices could decline.
In 2024, gold bullion holdings came close to their highest levels since World War II, a trend primarily driven by central banks in emerging markets steadily increasing their gold reserves. As per the IMF, steady changes are underway in the global reserve system, including a gradual movement away from dollar dominance and a rising role of non-traditional currencies.
Currency and Commodity Head at HDFC Securities, Anuj Gupta, spoke to ETV Bharat about the Economic Survey's remark that gold prices are expected to decrease. He mentioned that while the survey's prediction is based on the World Bank's outlook report, it also signals that the government may announce something significant in Saturday's budget to arrest the surging prices of gold. Currently, the trend of gold prices looks upward, but if the government reduces import duty in the budget or takes any measures to slow down gold consumption, prices are likely to decline.
Gold imports also saw an uptick during this time, primarily because of higher global prices. This was driven by early buying in anticipation of the festival season and a greater demand for gold as a secure asset amid worldwide instability.
