Gold and Silver Market Update
Gold remains a top asset, often regarded as a safe haven during uncertain times, but it certainly comes with risks. Prices can fluctuate significantly, and different avenues for investing in precious metals carry their own unique set of challenges.
A month back, gold reached an all-time high of Rs 1,32,294 per 10 grams, largely driven by the Christmas season. However, as of 9 am on November 17, the price had dropped 6.88% to Rs 1,23,180 on MCX, which is also a 0.3% dip from the previous day’s close.
“Given that gold prices have already surged by 60-70% this year, a cooling effect and some profit-taking are understandable,” noted Manav Modi, a researcher and analyst for precious metals at Motilal Oswal Financial Services.
So, what should investors think about these price changes in the bullion market? And how will the recent rate cut by the US Federal Reserve affect short-term trends for gold and silver in India? Central banks are still stockpiling gold, but what does that imply for long-term price stability? Furthermore, how has the demand for industrial uses influenced silver’s performance this year? Let’s dig deeper.
Long-term Gold Outlook
“Economic indicators have been affected by the recent reopening of the US government after a lengthy shutdown. Factors like potential liquidity boosts, continued central bank purchases, and consistent ETF inflows provide a solid foundation for gold prices,” Modi mentioned. He further stated that the long-term outlook for bullion appears bullish, suggesting that investors should consider locking in profits during price rallies while also preparing to invest during downturns.
After the Federal Reserve reduced interest rates to a range of 3.75% to 4% in October, initial market reactions speculated that political pressure might have played a role. Fed Chair Jerome Powell pointed out, however, that while growth outlooks remain uncertain, inflation risks are still high due to the ongoing effects of tariffs and the government shutdown.
“Unless the labor market shows signs of weakness, a full easing cycle from the Fed seems unlikely. This expectation is reflected in market pricing; the likelihood of a December rate cut has plummeted from about 90% to nearly 50%. There’s a bit of uncertainty curtailing short-term gains for gold and silver, but if another dovish shift or rate cut occurs in December, we might see a resurgence in prices,” Modi explained.
“With implied volatility on the rise, the gold market is experiencing unusual fluctuations daily. This variability makes it crucial for investors to be cautious and diversify their timing for investments. In India, if USD/INR hovers around 90, a support range of Rs 120,000 to Rs 130,000 crore could hold strong. If this stays consistent, the broader trend might point towards an increase to Rs 130,000 and even Rs 137,000 crore next year,” Modi added.
Central Banks and Gold Accumulation
As reported by the World Gold Council, central banks acquired 220 tonnes of gold in the third quarter of 2025, marking a 28% rise from the previous quarter. The Reserve Bank of India (RBI) added approximately 600 kg during the first half of 2025, boosting its reserves to around 880 tonnes.
This consistent buildup signals gold’s function as a strategic hedge in times of global uncertainty. Even with short-term selling pressure, the ongoing demand from central banks supports long-term price stability, reinforcing gold’s reputation as a reliable long-term store of value in a volatile economic landscape, according to Modi.
How about silver? This year, silver notably outpaced gold, largely thanks to its combined role as a safe haven and an industrial metal. Modi mentioned that despite significant profit-taking across precious metals, the underlying momentum continues to look promising. As electric vehicles, solar panel manufacturing, and clean energy initiatives gain traction in markets like China, the United States, and domestically, industrial consumption of silver is expected to rise.
“While the global supply crunch is still a structural issue, some of the immediate shortages are beginning to ease. Alongside the stabilizing demand from industrial sectors and investment avenues like ETFs, these factors hint that silver may maintain its upward trend in the coming months,” Modi stated.
Investing in Gold and Silver ETFs
In India, interest in gold and silver ETFs has surged, with gold ETFs nearing Rs 1,000 crore in assets and silver ETFs approaching Rs 35,000 crore. This significant growth reflects a strong investor belief in these products and their fundamentals.
“For those with a year or more investment horizon, ETFs present a transparent and cost-effective way to invest in these precious metals. Considering the current macroeconomic climate and the ongoing uncertainties, allocating some of your portfolio to gold and silver ETFs could be a sound diversification strategy depending on your risk tolerance,” Modi advised.
