Gold, silver prices rally not likely to lose steam any time soon; here's why

Gold prices have breached the $4,000 per ounce threshold, marking one of the steepest rallies in recent decades, as domestic demand in India remains resilient despite record highs. Motilal Oswal Financial Services now anticipates gold to reach $4,250–$4,500 per ounce on COMEX and ₹1.28–₹1.35 lakh per 10 grams in India if current momentum persists. Silver, benefiting from robust industrial demand, could hit $75 per ounce internationally and ₹2.30 lakh per 10 grams domestically. The current rally is distinct, led by Asian nations—most notably China, India, Turkey, and the Middle East—accumulating precious metals as safe-haven and reserve assets.

Meanwhile, gold price on MCX climbed by Rs 1,185 per 10 gm today to a fresh peak of Rs 1,28,395 against the previous close of Rs 1,27,210 per 10 gm.In dollar terms, gold prices reached a record high of $4,242 ounce.

Gold imports into India have reached 300 tonnes, while silver imports stand at 3,000 tonnes by Q3 2025. The gold–silver ratio, after peaking near 110, has narrowed to around 81–82 due to renewed industrial buying, particularly in sectors like solar, electric vehicles, and AI, amid silver’s fifth consecutive year of global supply deficit.

The domestic market’s strength is further underscored by seasonal factors ahead of Diwali, with historical trends indicating price rises in seven of the past ten festival seasons. Pre-festival gains have often surpassed those after the festival, driven by investor optimism and cultural sentiment.

Motilal Oswal notes that central bank purchases and Exchange Traded Fund inflows are key drivers behind the precious metals’ strength.

“While short-term corrections may occur, gold and silver are supported by central bank purchases, ETF inflows, and structural demand from Asia,” said Manav Modi, Analyst, Commodities & Currencies, Motilal Oswal.

The macro environment also favours gold, with a weakening dollar index, anticipated US Federal Reserve rate cuts, and political uncertainty in major economies like Japan and China further reinforcing the bullish sentiment.

Supply constraints are tightening the market, as declining ore grades, rising costs, and stricter environmental regulations restrict gold production, while recycling growth remains modest. Central banks have purchased over 600 tonnes between January and September 2025, and gold ETF inflows have totalled 450 tonnes, the strongest since 2020.

“Central bank diversification is redefining the bullion market, aligning institutional and sovereign demand with long-term value creation,” said Navneet Damani, Head of Research – Commodities & Currencies. Market analysts suggest the ongoing rally, underpinned by both structural and macroeconomic factors, may persist if industrial demand and central bank accumulation continue apace.