If you invested in gold during Diwali 2019, your returns would be more than 103% today, according to a recent study by Motilal Oswal Financial Services Ltd (MOFSL). As Dhanteras approaches, MOFSL’s outlook on gold and silver remains bullish, with projections for further growth in both precious metals.
Notably, silver may outperform gold over the next 12-15 months, backed by robust industrial demand and safe-haven buying.
MOFSL has set an ambitious target for silver, expecting it to reach ₹1.25 lakh per kg on the Multi Commodity Exchange (MCX) and $40 per ounce on COMEX by the end of 2025.
Silver has already shown impressive growth, gaining over 40% year-to-date and recently crossing ₹1 lakh domestically.
Gold, meanwhile, has targets set at ₹81,000 per 10 grams in the medium term and ₹86,000 per 10 grams in the long term, with expectations of reaching $2,830 per ounce and $3,000 per ounce on COMEX, respectively.
Diwali and gold’s historical performance
Gold has traditionally shone during the Diwali season, driven by heightened demand.
Historically, MOFSL notes that the period leading up to Diwali has shown strong positive returns for gold, with only two instances (2015 and 2016) of losses in the last decade.
This trend stresses gold’s position as a reliable store of value, particularly during times of uncertainty.
Key drivers for precious metals in 2024
2024 has been a remarkable year for precious metals, buoyed by two primary factors: rate-cut expectations by the Federal Reserve and rising geopolitical tensions, especially in the Middle East. The Fed’s recent 50 basis point rate cut is part of an attempt to stimulate economic growth amid slowing inflation and mixed labour market signals.
According to MOFSL analyst Manav Modi, “This year’s rally in precious metals is driven largely by market uncertainties and a depreciating rupee. The months following the US presidential election will be critical for shaping gold’s trajectory.”
Additionally, geopolitical tensions from conflicts like Russia’s invasion of Ukraine and the ongoing unrest in the Middle East continue to push investors toward safe-haven assets like gold and silver.
MOFSL expects these global uncertainties, coupled with anticipated rate cuts, to provide further support to precious metals in the near term.
Silver’s outperformance potential
While gold has been a steady performer, silver stands out for its potential to outpace gold returns due to its dual demand from both industrial sectors and investors.
MOFSL’s forecast suggests silver may offer higher percentage gains than gold over the coming year.
Long-term investment opportunity
Despite short-term volatility, MOFSL remains positive on gold’s and silver’s long-term growth.
“We continue to believe that gold has further upside potential, where any price dips could present buying opportunities,” added Modi.
For investors keen on accumulating wealth over the long term, precious metals offer a stable investment path amidst economic fluctuations.