Gold, silver enter 4–5 year bull cycle - what it means for investor portfolios amid market flipflops?

Gold and silver are showing early signs of entering a multi-year structural bull cycle, supported by strong underlying fundamentals such as sustained central bank buying, favourable interest rate dynamics and rising industrial demand. According to Emkay Wealth Management, the ongoing rally reflects a deeper shift in global capital allocation, with precious metals increasingly being treated as core components of diversified portfolios rather than short-term tactical trades.

Market analysts say this marks a departure from earlier cycles dominated by speculative flows. Instead, the current uptrend is being driven by long-term structural factors, making it particularly relevant for Indian investors who have benefited from both global price gains and favourable currency movements.

“The current rally in gold and silver is not being driven by speculation, but by a structural shift in how investors globally are allocating capital,” said Dr Joseph Thomas, Head of Research at Emkay Wealth Management. “With central banks continuing to accumulate gold, interest rate cycles turning supportive, and silver benefiting from rising industrial demand, precious metals are increasingly being viewed as core portfolio assets.”

Several macroeconomic factors are reinforcing the outlook for gold and silver. Expectations of interest rate cuts in the US, the prospect of a softer dollar, and persistent central bank gold purchases since 2022 have strengthened the case for precious metals. Emkay also points to heightened geopolitical and macroeconomic uncertainty, which has pushed investors to increase allocations to safe-haven assets.

“A moderation in global growth combined with accommodative monetary policy would continue to support gold and silver prices,” Emkay said, adding that these conditions have helped improve price stability and long-term investor confidence in the asset class.

Silver investment

Silver, in particular, stands out in the current cycle due to its growing industrial relevance. Unlike previous rallies that were largely investment-driven, silver is now benefiting from rising demand across sectors such as renewable energy, electronics, electric vehicles and advanced manufacturing. “Silver’s performance has been particularly noteworthy due to the expansion of industrial demand,” Emkay noted, adding that this structural demand differentiates the current rally from earlier cycles and enhances its sustainability.

For Indian investors, currency movements remain a critical variable. Emkay highlighted that gains from precious metals can be amplified or moderated depending on the rupee’s trajectory. “Investors who allocated to gold over the past 12 to 18 months have benefited not only from higher global prices but also from the depreciation of the rupee against the US dollar,” the firm said. However, it cautioned that any sharp appreciation in the rupee could temper future returns even if global prices remain firm.

Guidance for investors

Emkay’s guidance is for investors to maintain a balanced and disciplined approach to precious metals. For new investors, the firm recommends allocating around 5–10% of the overall portfolio to gold and silver, preferably through staggered investments to manage volatility. Those with significantly higher exposure—particularly where precious metals account for more than 25–30% of assets—are advised to review allocations with a financial adviser and consider partial profit booking while retaining long-term positions.

On investment routes, Emkay suggests spreading exposure across instruments such as physical gold, gold and silver ETFs, gold mutual funds and other precious metal-linked products. Staggered allocations, it said, help reduce timing risk and smooth portfolio volatility.

While periodic corrections and profit-taking are likely after sharp rallies, Emkay remains constructive on the medium- to long-term outlook. “The structural drivers supporting gold and silver remain firmly in place,” the firm said, adding that precious metals continue to offer diversification, stability and protection against macroeconomic and currency uncertainty.