As India celebrates Dhanteras and prepares for Diwali, demand for precious metals like gold and silver is on the rise as investors and consumers flock to make their festive purchases. Typically, gold and silver are in high demand in the run-up to Diwali. Are you planning to buy the yellow or white metals this festive season? Many analysts believe silver is set to outshine gold in the year ahead.
Motilal Oswal Financial Services’ Manav Modi is positive on silver from a 12-15 month perspective, with the white metal set to at least match gold’s performance over the medium to long term.
While 2024 has seen a significant rally in gold rates driven by market uncertainties, anticipated rate cuts and a weakening rupee, the period following the upcoming US presidential election will be crucial for the short-term outlook of the yellow metal, Commodity Research Analyst at MOFSL.
“The rally in precious metals this year is largely supported by expectations of Federal Reserve rate cuts and escalating geopolitical tensions, especially in the Middle East. Overall, the sentiment heading into Diwali is positive, fostering optimism for bullion,” said the analyst.
He has highlighted two main factors that led to gold’s stellar run this year:
- Expectations of Fed rate cuts
- Rising geopolitical tensions particularly in the Middle East
“Overall, the sentiment for this Diwali is projected to be positive, raising optimism for bullion,” said Modi.
Silver headed to Rs 1.25 lakh/kg?
MOFSL has placed its target for MCX silver futures at Rs 1,25,000 and for COMEX silver futures at $40 an ounce supported by robust industrial demand and safe-haven buying.
“Silver has already demonstrated strong performance this year, surging over 40 per cent year-to-date and surpassing Rs 100,000 domestically.” wrote MOFSL analysts in a research report dated October 26.
Can gold reach Rs 86,000/10 grams mark anytime soon?
MOFSL sees gold reaching targets of Rs 81,000 and Rs 86,000 in the medium and long terms respectively. On COMEX, gold is seen reaching $2,830 an ounce in the medium term and $3,000 in the long term, according to the brokerage.
Gold has been a consistent performer, with gains in nearly every year since 2016, except for 2021.
This year has been particularly notable, with gold hitting all-time highs in both domestic and international markets, up over 30 per cent year-to-date.
Dhanteras 2024 | Short-term strategies for gold and silver
Analysts at Ventura Securities suggest buying gold on dips on MCX in the medium term with support at Rs 77,000 for targets ranging from Rs 79,000 to Rs 85,700.
For silver, the analysts have pegged support at Rs 95,500 with targets ranging from Rs 1,06,000 to Rs 1,20,000.
How gold and silver and fared in 12 months
In the last year, the commodity market showed very high volatility because of higher volatility in the dollar index, the US bond yields, inflation concerns, the Chinese real estate crisis, geopolitical tensions and higher energy prices, according to analysts.
Inflation was a major discussion during the year but it stats cooling off from the second quarter of 2024 and global central banks started monetary easing during the period.
The government has cut the high import duty on gold and silver, despite their returns standing at over 30 per cent in the last year.
