Precious Metals Set to Shine: Motilal Oswal's Bullish Outlook

Motilal Oswal Financial Services has released an optimistic forecast for gold and silver prices, predicting substantial gains in both international and domestic markets. The projections come amid an impressive rally in precious metals, driven by strong Asian demand and increased central bank purchases.

Gold: Aiming for New Heights

According to Motilal Oswal's analysis, gold prices are expected to reach new record levels:

Silver: Poised for Significant Appreciation

The outlook for silver is equally bullish, with projections indicating substantial growth:

Driving Factors Behind the Rally

Several key factors are contributing to the strong performance of precious metals:

1. Asian Demand Leadership: China, India, Turkey, and Middle Eastern nations are leading in accumulating precious metals.

2. Central Bank Purchases: Central banks acquired 600 tonnes of gold from January to September.

3. ETF Inflows: Global Gold ETF inflows reached 450 tonnes during the same period.

4. Indian Imports: India had imported 300 tonnes of gold and 3,000 tonnes of silver by Q3.

5. Macroeconomic Factors:

   • Dollar index below 100
   • Anticipated US Federal Reserve rate cuts
   • Political uncertainty in Japan

Supply and Demand Dynamics

Gold

• Supply remains constrained due to declining ore grades and rising costs.

Silver

• Faces increasing industrial demand from solar, EV, and AI sectors.
• Experiencing a fifth consecutive year of global supply deficit.

Market Indicators

• The gold-silver ratio has narrowed from 110 to 81-82.
• Domestic Indian demand shows resilience despite record-high prices ahead of the Diwali season.

As precious metals continue to attract investors and industrial users alike, the outlook remains positive for both gold and silver. However, investors should consider their own financial goals and risk tolerance when making investment decisions based on market forecasts.

Gold and silver prices have experienced a significant surge, with both metals reaching new highs amid global economic uncertainty and market volatility.

Precious Metals on the Rise

Gold has shown remarkable strength, rising for eight consecutive weeks. Meanwhile, silver has broken past its 2011 highs, surpassing $50.00 per ounce in international markets and reaching ₹1,53,400.00 per kg in India.

Dollar Index Volatility

The dollar index has exhibited high volatility, moving from 96.22 in late September to 99.56 by October 9, before easing to 98.92. This fluctuation is largely attributed to ongoing US-China tariff tensions and the current US government shutdown, both of which are impacting currency markets.

Rupee Outlook

The Indian rupee is expected to trade between ₹87.50 and ₹88.50, with the Reserve Bank of India's intervention likely to keep it stable around ₹87.00-88.00 per dollar.

Silver Supply Constraints

Silver is facing supply constraints, with production running at a deficit for four to five years. London Metal Exchange inventories have fallen to nearly half of their year-start levels, further tightening the market.

Technical Levels for Gold and Silver

For gold, key support levels are identified at ₹1,21,200.00 and ₹1,20,000.00, with resistance at ₹1,24,600.00 and ₹1,25,400.00. Silver shows support at ₹1,50,000.00 and ₹1,48,000.00, with resistance at ₹1,56,000.00 and ₹1,58,000.00.

Factors Supporting Precious Metals

Both gold and silver are benefiting from several supportive factors:

• Safe-haven demand in uncertain economic times
• Increased inflows into Exchange-Traded Funds (ETFs)
• Active buying by central banks

As global economic uncertainties persist and geopolitical tensions remain high, the precious metals market continues to attract investor interest, with both gold and silver maintaining their upward momentum.