Gold Price Outlook & Diwali Target: Rising tensions between the US and Iran have once again heightened global geopolitical uncertainty and fears of inflation. Amidst this tension, the appeal of gold as a safe-haven investment has surged once more.

While gold has approached the $4,000 per ounce mark in the international market, domestic prices are currently hovering between ₹1.40 lakh and ₹1.42 lakh per 10 grams. Consequently, investors and retail buyers are in a dilemma about whether or not to purchase gold right now. Let us analyze how gold prices might trend leading up to Diwali.

Will there be a significant drop in gold prices?

Market analysts and experts believe that, despite recent fluctuations, a major or sharp decline in gold prices is highly unlikely.

According to experts, gold has established a strong base at current levels. Even if prices were to dip from here, the decline is likely to be limited to around 5%. In the domestic market, gold enjoys very strong support at the ₹1.35 lakh per 10 grams level. Therefore, customers should not postpone their purchases in anticipation of a drastic price drop.

Why are gold prices rising?

Three primary factors are driving the current rally in gold prices:

Geopolitical Tension: The escalating conflict between the US and Iran has drawn investors away from riskier avenues like the stock market and towards gold.

Crude Oil and Inflation: Rising crude oil prices have reignited global concerns about inflation, thereby increasing the demand for gold as a hedge.

US Federal Reserve: Uncertainty regarding the US central bank's interest rate policy is also influencing investor sentiment.

Where could gold prices reach by Diwali? Analysts have outlined two potential scenarios regarding gold prices for Diwali:

Scenario 1: If geopolitical tensions ease globally and conditions normalize, domestic gold prices could surge to the level of ₹1.60 lakh per 10 grams.

Scenario 2: If the atmosphere of tension and uncertainty persists, gold prices will likely remain within a narrower range of ₹1.35 lakh to ₹1.45 lakh.

Global Target: Gold has strong support at the $3,800 mark in the international market, while the $5,100 level is considered crucial for the long term.

Revival in the Jewelry Market: A Good Opportunity to Buy

A recent slight dip in gold prices has reignited consumer demand in the jewelry market. Sales had witnessed a sharp decline when prices were at record highs, but they are now recovering. With the upcoming festive season—starting in August and September—bullion traders anticipate that gold demand this Diwali could match or even surpass last year's levels.

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