'Gold should outperform silver going forward in 2026...' Kunal Shah on geopolitical tensions, tariff risks

Gold and silver prices declined on Tuesday, pressured by a firmer US dollar even as geopolitical tensions and trade uncertainty continued to simmer. Comex gold retreated from a more than three-week high, while silver dropped over 3% after a sharp rally in the previous session.

Spot gold fell 1.5% to $5,150.38 per ounce after touching its highest level in over three weeks earlier in the day. US gold futures for April delivery were down 1.1% at $5,170.70 an ounce. Silver was hit harder, with spot prices plunging 3.1% to $85.50 per ounce after scaling a more than two-week high on Monday.

Despite the pullback, market experts believe the broader trend for precious metals remains constructive amid escalating geopolitical tensions and renewed US tariff uncertainty.

Kunal Shah, Head of Commodity Research at Nirmal Bang, told Business Today that gold’s recent rebound follows a sharp correction seen about a month ago.

“I think the precious metal, after the profound correction we saw a month back, is now witnessing a sharp recovery on account of two main reasons — one, geopolitical concerns. The US-Iran issue is really on the verge of escalating further, and apart from that, tariff uncertainty has once again returned and created chaos in the global financial markets. These are the two reasons why precious metals have started to perform well. Going forward, whatever has happened on the US tariff front makes me believe that the possibility of another round of direct or indirect quantitative easing is on the cards, because whatever losses Donald Trump accounts for after the Supreme Court's decision will have to be absorbed by someone. I don’t think people can really bear those losses. So I think the Fed may have to print more.”

Last week, the US Supreme Court blocked several levies imposed under the Trump administration, prompting President Donald Trump to announce a new 10% tariff effective Tuesday, with a warning that it could rise to 15%. The move has led key trading partners to reassess their stance, with the European Union pausing ratification of its trade pact and India deferring trade discussions with Washington.

Shah added that liquidity dynamics are also playing a critical role in supporting bullion.

“Over the last two months, the Federal Reserve has been initiating a process called reverse repo purchases, through which it is continuously infusing liquidity into the financial system on a day-to-day basis. That is what is basically fueling the rally in bullion right now. So these two expectations — geopolitical uncertainty and tariff uncertainty — will continue to fuel upside momentum in gold. $5,280 to $5,300 are the levels we can expect for gold. For silver, $90 and $94–95. I’m not outright bullish on silver with very bold targets, but I think the possibility of another 7–8% upside in silver and 3–4% upside in gold is very much on the cards,” he added.

However, the silver rally appears to be driven more by global investment flows and Chinese demand rather than domestic industrial consumption. Physical silver in Mumbai is currently trading at a discount of around ₹1,000 to MCX futures, indicating subdued industrial demand.

On silver’s physical trends, Shah said: “I think right now if you look at what is happening on the industrial demand side there is no much industrial demand the physical market is quoted at a discount in Mumbai it is quoted at a discount of 1,000 rupees than what is trading at MCX futures so this is an indication of the weak industrial demand in India and also today we are seeing that after a pause of 8 days Chinese markets have opened up and silver over there is up by almost 8 to 10%. That is basically taking cues from the international market and that is what is fueling the rally right now.”

He further noted: “That has been the case throughout the year — whenever prices have rallied, the physical market has not responded. Instead, investment demand in the form of ETFs and other products, along with active Chinese buying, has been fueling this rally. This has nothing to do with strong Indian industrial demand; rather, it is global investment demand coupled with strong Chinese demand that is driving silver’s rally.”

On a relative basis, Shah expects gold to outperform silver in the current macro environment.

“Gold should outperform silver going forward because, until there is any indication of an exponential rise in silver demand at these levels, the possibility that gold may outperform silver remains very high, considering the kind of environment we are living in. We don’t know what Mr. Trump is going to do next after the Supreme Court’s decision. This 15% tariff is not going to do any good for the US because China, Brazil, India — all of them — are going to pay far less tariff than what they used to pay earlier. I think this does not bode well for the US, and hence we believe this uncertainty will continue to favour gold over silver. Fundamentally, gold should outperform silver and do much better in terms of ratio trading in 2025. This is the year when, in the gold-silver ratio, gold should outperform — that is our base case call.”