"The expected decline in domestic gold prices takes cues from the likelihood of a decline in international gold prices to between $1,150-1,250 an ounce during FY15, from the current levels of $1,300 an ounce," India Ratings and Research said, while assigning a negative outlook to domestic gold price for FY15.
Currently, gold prices are ruling at Rs. 29,500-Rs. 30,000 in major domestic markets.
The agency expects a further strengthening in the US and Eurozone GDP growth rates in FY15. This is likely to strengthen the US dollar against other currencies.
The US Dollar Index, which measures the value of the greenback against a basket of major global currencies, has historically had a negative correlation with gold prices and it is expected to remain strong.
The ratings agency says the gradual winding up of stimulus measures in the US might cause interest rates to creep up and discourage investments in gold.
While the US has initiated the process of winding-up of stimulus measures, the European Union and Japan continue with their loose monetary policy.