"The expected decline in domestic gold prices takes cues from the likelihood of a decline in international gold prices to between USD 1,150-1,250 an ounce during FY15, from the current levels of USD 1,300 an ounce," the ratings agency said, while assigning a negative outlook to domestic gold price for FY15.
Gold prices are ruling at Rs 29,500- Rs 30,000 in major domestic markets at present.
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.
It added that the gradual winding-up of unconventional monetary policy (UMP) in the US might cause interest rates to creep up and discourage investments in gold.
Continued risk-on-trade on back of a global economic recovery could generate limited interest in gold ETF (electronic trade fund) investments and could lead to a further unwinding of gold inventory, however, the pace is likely to be moderate.
While the US has initiated the process of winding-up UMP, EU and Japan continue with their loose monetary policy.
"However, we expect the net buying to moderately recede in FY15," Ind-Ra said.
Ind-Ra has based its forecast on a substantially lower level of physical premium (importers and traders mark-up) than that prevailed in 2013, due to clarity on gold import policy.
However, this forecast may change if there are lower-than-expected GDP growth rates in the US and EU, geopolitical tensions and China's financial market uncertainty, which could cause gold prices to go up above USD 1,300 levels.