Anindya Banerjee, Senior VP and Head of Commodity Research at Kotak Securities, believes the current surge in precious metals represents a fundamental shift in global markets, driven more by structural monetary changes than temporary geopolitical tensions. In a detailed analysis, Banerjee outlined why gold and silver continue to outperform traditional assets and shared specific price targets for investors.

Structural Drivers Behind Precious Metals Rally

Banerjee emphasized that the current rally in gold and silver stems from structural rather than transitory factors. "Commodities are increasingly behaving like an alternative form of currency," he explained, attributing the surge to a global monetary reset where hard assets appreciate as fiat currencies, particularly the US dollar, face steady debasement relative to finite real assets.

This structural shift explains the outperformance of precious metals across most asset classes over both one and five-year periods. The expert noted that gold, silver, copper, and platinum are gaining value not due to surging global growth or demand, but because of their finite nature compared to increasingly debased paper currencies.

Price Targets and Investment Strategy

Banerjee provided specific price targets for both precious metals, with gold currently trading around $4,700 per ounce and approaching the earlier target of $5,000. His analysis suggests potential for gold to reach $5,500 over time, supported by upcoming US fiscal policies and Federal Reserve pressure.

For silver, Banerjee sees even stronger potential, projecting possible gains of 60-70% this year with medium-term targets of $160-180 per ounce. However, he cautioned about silver's higher volatility compared to gold.

Recommended Allocation and Entry Strategy

To balance risk and opportunity, Banerjee recommends a 60% gold and 40% silver allocation for investors looking to capitalize on precious metals' potential while managing volatility. He advocates combining lump-sum and systematic investment plan (SIP) approaches to optimize entry timing.

The expert suggests this dual strategy helps investors avoid missing rallies due to correction fears while allowing them to benefit from periodic pullbacks. For immediate entry points, he identified specific levels:

Domestic Premium Dynamics

A significant development highlighted by Banerjee is the structural change in global silver markets, where domestic prices now trade at premiums of 8-10% over global benchmarks. This represents a departure from traditional pricing mechanisms where LBMA prices formed the benchmark.

The premium persists due to several factors:

• Physical silver no longer moving freely from Western vaults to Asian markets
• COMEX and LBMA inventories at record lows
• Aggressive competition for physical silver in Asian markets
• Sharp rise in India's silver imports over the past five years
• Increased speculative and retail participation

Market Outlook and Risk Factors

Banerjee expects short-term corrections of five to eight days as normal market behavior, but believes prolonged consolidation would require major triggers such as sharp global equity market corrections. As long as global equities continue rising on liquidity expansion, gold and silver should remain supported.

Regarding crude oil, he identified Iran as the most significant geopolitical risk, with potential price spikes toward $75-80 per barrel in case of escalation. However, he expects such rallies to be unsustainable due to weak global demand growth and strong non-OPEC supply from North and South America.

With Union Budget 2026 just 10 days away, the precious metals industry is advocating for transformative reforms as gold and silver prices reach unprecedented levels. Industry leaders view the upcoming budget as a crucial opportunity to modernize how Indians invest in gold, particularly through digital platforms and formal financial instruments.

Record Gold Prices Drive Investment Shift

Gold prices have surged to lifetime highs this week, with rates approaching ₹1.50 lakh per tola. This dramatic price appreciation has created both opportunities and challenges for the market.

The price rally has rewarded long-term investors but highlighted a structural challenge: a substantial portion of household gold remains in physical form, offering limited contribution to the broader economy.

Digital Gold Awareness Campaign Needed

Mahendra Luniya, Chairman of Vighnharata Gold Ltd, emphasizes the urgent need for government intervention to promote digital gold adoption. "If we look at the goal of Viksit Bharat 2047 from a logical and economic standpoint, it becomes clear that India must unlock the vast amount of gold lying idle in households and integrate it into the digital economy," Luniya stated.

Gold Exchange-Traded Funds (ETFs) allow investors to gain gold price exposure without physical ownership. These instruments track domestic gold bullion prices and trade on stock exchanges like shares, with each unit typically representing one gram of high-purity gold held by the fund. Similar mechanisms exist for silver ETFs.

Economic Impact of Household Gold Integration

The industry argues that converting physical gold stored in homes into digital assets could significantly accelerate economic growth. According to industry estimates, shifting even a small portion of household gold savings into digital instruments could provide substantial capital availability and enhanced economic activity.

"This effectively locks a massive amount of liquidity inside private vaults instead of allowing it to circulate within the Indian economy. Digital gold offers a practical solution to unlock this value," Luniya explained.

Sovereign Gold Bond Revival Sought

A key expectation from Budget 2026 is the revival of the discontinued Sovereign Gold Bond (SGB) scheme. Industry leaders consider SGBs among the most effective policy measures in the gold sector.

"The impact of Sovereign Gold Bonds was clearly visible; public awareness increased, and behavioural change began to take place. Unlike many schemes that incur fiscal losses, SGBs allowed the government to access capital without financial strain while productively utilising household gold savings," Luniya noted.

Transformation Challenges and Opportunities

The transition from physical to digital gold faces inherent challenges, as many consumers still prefer purchasing gold as jewellery or coins. However, industry leaders believe that major budget announcements focused on awareness campaigns could demonstrate how India can effectively invest and monetize its most trusted asset.

The industry's expectations center on government initiatives that could integrate household gold savings into the formal financial system, supporting long-term economic objectives while maintaining investor confidence in gold as a reliable investment option.