The financial landscape for precious metals appears set for an exciting shift, with silver poised to potentially outperform gold in the coming year, according to the latest report from Motilal Oswal Financial Services Ltd (MOFSL). The firm predicts that silver prices could climb to Rs 1,25,000 per kilogram on the Multi Commodity Exchange (MCX) and reach USD 40 per ounce on the COMEX over the next 12 to 15 months. This forecast comes as silver has already demonstrated remarkable growth in 2024, achieving gains of over 40% and surpassing the Rs 100,000 mark domestically. The surge has been attributed to a combination of safe-haven demand and robust industrial applications.
In parallel, gold prices are anticipated to rise, though at a potentially slower pace. MOFSL projects that gold will reach Rs 81,000 per 10 grams in the medium term, with a further increase to Rs 86,000 in the long term. On the COMEX, gold could hit USD 2,830 in the medium term and USD 3,000 in the long term. The yellow metal has consistently performed well, with the exception of 2021, maintaining a positive domestic return streak since 2016. In 2024 alone, gold has experienced record highs on both COMEX and domestic markets, yielding over 30% growth year-to-date.
Manav Modi, a Commodity Research Analyst at MOFSL, attributes this year’s rally in precious metals to heightened market uncertainties, rate-cut expectations, rising demand, and a depreciating rupee. “Following the U.S. presidential election, the trajectory of gold prices could hinge on further rate cut expectations from the Federal Reserve and ongoing geopolitical tensions, particularly in the Middle East,” Modi said. He added that sentiment for the upcoming Diwali season remains optimistic, which could further boost bullion demand.
Historically, demand for gold surges during the festive season, and this year’s Diwali coincides with two major events: the U.S. presidential election and the final Federal Reserve policy meeting of 2024, both of which are expected to bolster market sentiment. However, MOFSL warned that rising prices could temper overall demand, potentially causing a slight dip domestically, though prices are expected to find support amid these key events.
An analysis by MOFSL on the trends in leap years and pre-Diwali gains suggests that only twice since 2011 (in 2015 and 2016) have the 30 days leading up to Diwali shown negative returns for gold. Excluding 2022, pre-Diwali gains have consistently outperformed post-Diwali gains. “We remain confident in gold’s long-term potential, viewing any short-term corrections of 5-7% as buying opportunities,” he added.
(ANI)
