Gold and silver prices have corrected recently, making them attractive contra buys for long-term investors, with analysts expecting a 20-25 percent rise in prices in a year. Gold prices are currently trading at ₹142,000, down 20 percent from their all-time high of around ₹180,000 per 10 grams hit in late January. Silver prices have faced a steeper decline, with their value more than halving to ₹187,000 per kg from above ₹400,000 around the same time. Despite this, gold prices have gained 8 percent and 10 percent on a year-to-date basis and from last Dhanteras, respectively.
According to historical spot market data, silver returns from last Dhanteras are 9.50 percent, while year-to-date returns are negative 18 percent. Gold and silver ETFs have largely mimicked this trend, with their performance closely tracking the physical market. Challenges like rising inflation, higher yields due to the surge in crude oil prices, and expectations of tighter Fed policies have put pressure on precious metals. Despite this, analysts argue that factors such as geopolitical tensions, central banks diversifying their reserves, limited supply, and strong investment demand continue to support these markets. Navneet Damani, who leads commodity research at Motilal Oswal Financial Services, noted that most negative factors are already reflected in current prices, suggesting a potential turnaround.
Gold is seen as a stable investment, while silver offers higher growth potential but with increased volatility. In 2026, ongoing conflicts and heightened inflation concerns have reinforced the likelihood of further monetary tightening, with markets expecting another rate increase in December. However, if inflation eases and the Fed starts lowering rates in 2027, gold could benefit from falling bond yields and a weaker U.S. dollar. Central banks have consistently purchased around 1,000 tonnes of gold annually in recent years, providing ongoing support to gold prices. Investment demand has also grown, with Monarch Networth Capital describing the sharp price drop in 2026 as a technical adjustment within a broader upward trend rather than a fundamental shift.
Analysts caution that some price fluctuations are possible, with a potential 2-3 percent dip. Nonetheless, both gold and silver could see significant gains, ranging from 15 to 35 percent from current levels. Damani recommends buying gold between ₹1,41,000 and ₹1,43,000, with a 12-month target of ₹1,68,000, indicating a 16 percent increase. For silver, the suggested buying range is ₹172,000 to ₹175,000, with a target of ₹2,55,000, pointing to a 36 percent rise. Axis Direct forecasts an 18 percent increase in gold prices by the next Dhanteras. While ETFs are one of the ideal mechanisms to invest in bullion, Damani advises some exposure in physical gold and some in ETFs.
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