After delivering exceptional returns in 2025, gold and silver have transformed from portfolio hedges to potential core holdings. The precious metals rally continues gaining momentum, with market experts now setting even more ambitious price targets while acknowledging evolving market dynamics.

Structural Forces Drive Long-Term Bullish Outlook

Early bulls who predicted gold's rise are doubling down on their forecasts. Edward Yardeni, president of Yardeni Research, and private investor Naresh Katariya, who flagged the possibility of gold reaching $4,000 when prices hovered near $2,950 nine months ago, now see even higher targets ahead.

"A lot of investors who didn't do well in 2025 have realised gold was the more stable place to be," Yardeni said, pointing to Chinese investors affected by property losses and volatile equity markets as fresh sources of demand. He now sees gold potentially reaching $6,000 by year-end and $10,000 by decade-end, driven by portfolio rebalancing rather than traditional valuation metrics.

Central Bank Buying Remains Key Support

Central bank purchases continue supporting gold prices, even with moderated pace. Latest estimates show disclosed purchases at around 800-900 tonnes in 2025, slightly below the 1,000-tonne average of recent years. However, unreported buying may understate actual demand.

The shift toward physical control reflects growing geopolitical sensitivity, with India alone repatriating over 300 tonnes in the past five years.

Global Ownership Remains Surprisingly Low

Despite recent gains, global gold ownership outside India remains minimal. Goldman Sachs estimates total US investor exposure at just 21 basis points, contrasting sharply with Morgan Stanley's CIO recommendation of 20% portfolio allocation.

Yardeni describes gold as a 'sleeper asset' that investors ignored for decades in favour of stocks and bonds. This changed decisively after gold broke above $2,000 in 2024, triggering broader institutional interest.

Silver Faces Mixed Dynamics Ahead

Silver's trajectory may prove more volatile than gold's steady ascent. Commodity expert Anuj Gupta expects short-term volatility as global indices rebalance, potentially reducing silver weightings while increasing exposure to energy and industrial metals like copper.

Despite rebalancing pressures, Gupta doesn't expect deep corrections. Rising allocations to industrial metals could indirectly support silver given its manufacturing and electronics applications.

Investment Strategy: Measured Approach Recommended

Experts maintain their cautious optimism while acknowledging the changed landscape. The consensus continues favouring measured allocation strategies after 2025's substantial gains.

"It's time to be cautious in allocation after the recent run up," advises Navneet Damani, head of research-commodities & currency at Motilal Oswal Financial Services. "Buying aggression should be measured because bouts of correction could come in. That should be the time to accumulate again."

The strategy emphasizes buying on dips rather than chasing momentum, recognizing that while structural factors support higher prices, short-term volatility remains likely as markets adjust to new realities.

Gold prices experienced a notable decline on Wednesday, December 31, as MCX gold futures dropped ₹1,140 or 0.8% from their previous close, highlighting the volatile nature of precious metals trading amid shifting global dynamics. The retreat came after a period of sharp volatility triggered by multiple geopolitical developments that had initially boosted safe-haven demand.

Price Movement and Market Dynamics

The domestic gold market saw significant movement as detailed in the following table:

Gold and silver had rebounded strongly on Tuesday from intraday lows due to renewed safe-haven demand. The sentiment was driven by multiple geopolitical factors including setbacks in the Russia-Ukraine peace process, U.S. strikes on Venezuelan dockyards, and Chinese naval drills amid rising U.S.-Taiwan friction.

Federal Reserve Policy Impact

Rahul Kalantri, VP Commodities at Mehta Equities, noted that the rally was capped following the Federal Reserve's policy meeting minutes, which indicated reduced expectations of aggressive rate cuts in 2026. This monetary policy shift has created a more complex environment for precious metals, balancing geopolitical support against potential headwinds from interest rate expectations.

Technical Analysis and Support Levels

According to Ponmudi R, CEO of Enrich Money, technical indicators continue to suggest underlying strength despite the recent decline:

The analysis indicates that while short-term price action remains under pressure, the broader structure is still viewed as bullish. Technicals continue to favor buy-on-dip strategies, though short-term movements remain sensitive to global developments.

Long-term Outlook and Projections

Analysts maintain a constructive view on gold's prospects for 2026. Mahendra Luniya, Chairman of Vighnaharta Gold, provided specific targets for the precious metal:

With global uncertainties and monetary policy expectations still evolving, the precious metals market remains finely balanced heading into the new year. Price action may remain range-bound in the near term, with traders closely monitoring shifts in geopolitical developments and central bank policy narratives that could influence the next directional move in gold prices.