Silver likely to outperform gold, may reach Rs 1.25L/kg on MCX, $40 on COMEX

Silver has recently delivered strong performance, rising over 40% year-to-date and surpassing ₹100,000 domestically, driven by safe-haven buying and solid industrial demand, according to a report by Motilal Oswal Financial Services Ltd (MOFSL).

Mumbai: Silver could either match or outperform gold in the medium to long term, and is likely to reach Rs 1,25,000 per kg on MCX and $40 on COMEX in the next 12 to 15 months, a report showed on Saturday.

Recently, silver has shown impressive performance, gaining more than 40 per cent (year-to-date) and breaching Rs 100,000 on the domestic front, fuelled by safe-haven buying and robust industrial demand, according to the report by Motilal Oswal Financial Services Ltd (MOFSL).

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MOFSL has also set targets for gold of Rs 81,000 in the medium term and Rs 86,000 in the long term. It expects gold to reach $2,830 on COMEX in the medium term and $3,000 in the long term.

“2024 has experienced a significant price rally fuelled by market uncertainties, expectations of rate cuts, rising demand, and a depreciating rupee. The months following the US presidential election will be critical in shaping gold’s near-term trajectory,” said Manav Modi, analyst, commodity research, Motilal Oswal Financial Services.

Two key factors underpinning this year’s rally in precious metals are expectations of rate cuts from the Federal Reserve and rising geopolitical tensions, particularly in the Middle East.

“Overall, the sentiment for this Diwali is projected to be positive, raising optimism for bullion,” Modi said.

Regardless of shifting narratives or market volatility, one constant remains — gold has historically served as a reliable store of value during uncertain times. According to the report, if one had invested in gold during Diwali 2019, they would be enjoying 103 per cent returns on their domestic gold investments by this Diwali. Since 2011, there have only been two instances (2015 and 2016) where the 30 days leading up to Diwali recorded negative returns.

Aside from 2022, pre-Diwali gains have consistently outpaced post-Diwali gains. “We continue to believe that gold has further upside potential wherein any dips could present buying opportunities. According to our recent quarterly report, a correction of 5-7 per cent is plausible and could serve as an accumulation zone,” said Modi.

Two key factors underpinning this year’s rally in precious metals are rate cut expectations from the Federal Reserve and rising geopolitical tensions, particularly in the Middle East.