Will the Gold and Silver Price Bubble Burst? Here's What We Know

From past few days price of gold and silver has seen upper graphs. Investors are expecting both precious metals to hit new highs during the festive season. But according to the experts their is possible downfall in the graph. Current bullish trend is unsustainable and gold prices could soon fall from Rs 1,22,000 to Rs 77,700 per 10 grams.

What expert say?

Amit Goyal, co-founder and chief global strategist at PACE 360, is of the clear view that gold and silver prices are currently well above their true value. His firm manages over $2.4 billion in assets. According to Goyal, "There have only been two times in the last 40 years when gold and silver have performed so well despite a weak dollar index. Both times were followed by a major decline in the market. The current rally is the 'biggest party ever in gold and silver'."

How much it can fall?

Goyal estimates that gold may fall by 30-35%. Earlier, after a big rally in 2007-08 and 2011, gold prices had fallen by 45%. If that happens, the price of gold in India could fall from the current Rs 1,22,000 to Rs 77,700 per 10 grams. Since silver is currently showing the highest bounce, it is possible to fall by at least 50%. That is, the price of silver could fall from Rs 1,54,900 to Rs 77,450 per kg.

Reason Behind Fall.

The current rally has reached a psychological limit, which usually indicates the end of any major bullish rally. After this, the selling pressure in the market will increase. According to Amit Goyal's forecast, a deep global recession led by the US may occur in the next 2-3 years.

Also Read: Gold prices hit historic highs globally, Indian rates touch Rs 1.22 lakh on MCX

This slowdown will weaken demand in industries like semiconductors, electric vehicles and photovoltaics, which will lead to a significant decline in industrial demand for silver. Goyal has advised investors not to buy immediately. According to him, if gold reaches the level of $ 2,600 to $ 2,700 per ounce in the international market, it will once again become the safest and most attractive investment in the world.