Silver Set to Shine Brighter Than Gold: Predictions for 2024
In New Delhi, experts from Motilal Oswal Financial Services Ltd (MOFSL) predict that silver could match or even outperform gold in the medium to long term. Silver prices are expected to reach Rs 1,25,000 per kilogram on the Multi Commodity Exchange (MCX) and USD 40 per ounce on the COMEX within the next 12 to 15 months. This year, silver has already shown impressive growth, with gains of over 40% year-to-date, surpassing Rs 100,000 domestically due to safe-haven demand and strong industrial usage.
Gold is also on an upward trend, with prices anticipated to reach Rs 81,000 per 10 grams in the medium term and Rs 86,000 in the long term. On the COMEX, gold is expected to hit USD 2,830 in the medium term and USD 3,000 in the long term. Gold has been a top-performing asset in recent years, except for 2021, consistently closing in the green domestically since 2016. This year, gold prices have surged to record highs, yielding over 30% growth year-to-date.
Manav Modi, an analyst at MOFSL, noted that 2024 has seen a significant price rally driven by market uncertainties, expectations of rate cuts, rising demand, and a depreciating rupee. The period following the U.S. presidential election will be crucial for gold’s near-term trajectory. Key factors driving this year’s rally in precious metals include expectations of Federal Reserve rate cuts and rising geopolitical tensions, particularly in the Middle East.
MOFSL highlights that historically, gold demand surges during the festive season, and this year, Diwali coincides with the U.S. presidential election and the final Federal Reserve policy meeting of 2024, enhancing market sentiment. However, concerns over rising prices could dampen overall demand, with domestic demand potentially experiencing a slight dip. Despite this, prices may still find support amid these major events.
According to MOFSL’s analysis of leap years and historical gold patterns, since 2011, there have only been two instances (2015 and 2016) where the 30 days leading up to Diwali recorded negative returns. Aside from 2022, pre-Diwali gains have consistently outpaced post-Diwali gains. Manav Modi added, “We continue to believe that gold has further upside potential, where any dips could present buying opportunities. A correction of 5-7% is plausible and could serve as an accumulation zone.”
Doubts Revealed
Silver -: Silver is a shiny, greyish-white metal that is used in making jewelry, coins, and electronics. It is also considered a valuable investment, like gold.
Gold -: Gold is a precious yellow metal that is often used in jewelry and as a form of money. It is also a popular investment because it holds value well.
MCX -: MCX stands for Multi Commodity Exchange, which is a place in India where people trade commodities like gold and silver.
COMEX -: COMEX is a market in the United States where metals like gold and silver are traded. It’s similar to MCX but in a different country.
Safe-haven demand -: Safe-haven demand means people buy things like gold and silver to protect their money when they are worried about the economy or world events.
Industrial use -: Industrial use refers to using silver in factories and industries, like making electronics and solar panels, because silver is a good conductor of electricity.
Rate cut expectations -: Rate cut expectations mean people think the government might lower interest rates, which can make borrowing money cheaper and affect investments.
Geopolitical tensions -: Geopolitical tensions are conflicts or disagreements between countries that can affect the economy and make people invest in safe things like gold and silver.
Diwali -: Diwali is a big festival in India, also known as the Festival of Lights, where people often buy gold and silver as gifts and for good luck.
U.S. election -: The U.S. election is when people in the United States vote to choose their leaders, like the President, which can affect the economy and investments worldwide.