Following an exceptional year for precious metals in 2025, market experts are anticipating a potential divergence in the performance of gold and silver during 2026. Ajit Banerjee, President and Chief Investment Officer at Shriram Life Insurance, has outlined distinct expectations for these two metals, suggesting that their paths may significantly differ in the coming year.

Precious Metals Outlook for 2026

Banerjee explains that gold and silver delivered outstanding returns in 2025, creating what he describes as "FOMO-type buying" that further fueled the rally. The performance was characterized by an almost one-way upward movement, with only a brief pause following Diwali when prices took a temporary breather.

Looking ahead to 2026, Banerjee anticipates that gold will regain its role as a relatively stable strategic hedge, while silver could remain far more volatile. The volatility in silver is expected to be driven by shifts in industrial demand, global growth expectations, and China's recovery trajectory.

Market Dynamics and Potential Shifts

The continued rally in precious metals is expected to persist into 2026, primarily supported by sustained investor interest in Gold and Silver ETFs. However, Banerjee cautions that market dynamics could shift if certain conditions emerge.

Potential factors that could redirect investor focus include:

• Rising bond yields
• Broad-based equity market rally
• Improved performance in alternative asset classes

Despite these potential headwinds, the expert maintains that gold's fundamental appeal as a strategic hedge remains intact, though he expects returns to be "more measured versus 2025."

Key Investment Considerations

For investors recalibrating their precious metals allocation, Banerjee emphasizes the importance of tracking several key triggers. The industrial demand component for silver makes it particularly sensitive to global economic recovery patterns, especially developments in China's economic trajectory.

The expert's analysis suggests that while both metals benefited from similar macroeconomic factors in 2025, their performance drivers may become more distinct in 2026. Gold's traditional role as a safe-haven asset is expected to provide more stability, while silver's dual nature as both a precious metal and industrial commodity could result in higher volatility.

Market Implications

The divergent outlook for gold and silver reflects broader market expectations about global economic conditions and industrial demand patterns. Banerjee's assessment indicates that investors should prepare for different risk-return profiles when considering these metals in their portfolios.

The continued interest in precious metals ETFs suggests that institutional and retail investor appetite remains strong, providing a supportive foundation for the sector. However, the expert's measured outlook for gold returns compared to 2025's exceptional performance indicates a more normalized market environment ahead.

Sharp volatility in precious metals is being driven by technical factors and seasonal thin trading rather than fundamental deterioration, according to Ajay Kedia, Founder & Director of Kedia Commodities. Speaking on Commodity Central with ET Now, Kedia attributed the recent market movements to overdue profit booking after exceptional gains in 2025, with silver experiencing a 10% correction followed by a quick 4.5% rebound.

Holiday Trading and Margin Pressures Drive Volatility

Kedia highlighted that current market conditions reflect multiple technical pressures rather than underlying weakness. Trading volumes remain muted due to the holiday period and are expected to stay thin until early January. The combination of low liquidity and margin adjustments has amplified price movements across precious metals.

"CME margin hikes on both gold and silver triggered profit booking. Markets were severely overbought, so some correction was inevitable," Kedia explained. Additional pressure came from concerns around global growth, including commentary from industry leaders and China's review of export policies for 2026.

Precious Metals Outlook: Corrections Expected, Upside Intact

Despite near-term volatility, Kedia maintains a constructive longer-term view on precious metals. He noted that similar corrections have occurred previously, citing October's 18% decline in silver and 13% correction in gold when markets became overheated.

For silver specifically, Kedia observed that the metal achieved its long-term target of $75-80 much earlier than expected. "Silver has achieved multi-year targets in a single year. Now the market needs time to digest gains," he said, suggesting a potential correction towards $60 before attempting moves toward $85-90.

Base Metals Positioned for 2026 Rally

Kedia believes base metals have lagged precious metals and could attract fresh fund flows as rate cuts support consumption. He outlined specific targets for key base metals:

"Consumption-driven demand from infrastructure and manufacturing has not yet fully played out. Base metals still have room to run," Kedia noted, suggesting these metals could outperform in 2026.

Energy and Steel Market Dynamics

In energy markets, Kedia pointed to Brent crude's 18-20% decline as reflecting a well-supplied market. OPEC+ actions are already discounted, while US production remains high and demand has lagged expectations. For the first quarter of 2026, he expects crude oil to trade in a narrow range of $58-66 per barrel, barring major geopolitical developments.

Regarding steel, domestic prices have recently moved towards ₹41,000 per tonne, though high inventories and ample supply may limit sharp upside. Kedia sees potential for steel to move towards ₹45,000 but doesn't expect dramatic gains similar to those seen in silver or copper.

Market Consolidation Expected

Kedia characterized 2026 as likely being "a year of consolidation rather than runaway rallies." He advised caution in the near term while maintaining optimism over the medium horizon, suggesting that corrections should be viewed as healthy, particularly in precious metals, while base metals could gradually assume market leadership.