Gold vs Silver: Which precious metal offers better risk-reward right now?

Gold and silver have both delivered strong returns in recent years, but their investment outlooks are increasingly diverging. According to Mirae Asset Mutual Fund's latest gold and silver market update, gold currently offers a relatively better risk-reward profile than silver, supported by robust central bank buying, resilient investor demand and its traditional role as a safe-haven asset. Silver, meanwhile, continues to benefit from supply shortages and industrial demand, but is expected to remain more volatile.

Why Mirae Asset prefers gold

The fund house says gold is backed by multiple structural drivers that could continue to support prices over the medium term.

One of the biggest factors is central bank buying. During the second quarter of 2026, central banks purchased 289 tonnes of gold, marking a 62% increase compared with the same period last year. Poland, China and the Czech Republic were among the major buyers, while the Reserve Bank of India also added to its gold reserves.

The World Gold Council's latest survey further reinforces this trend, with 89% of reserve managers expecting global gold reserves to increase, while 45% plan to add to their own gold holdings over the next 12 months.

MUST READ: Gold, silver prices today (August 7): Yellow metal nears ₹1.50 lakh, silver falls below ₹2.4 lakh. Check latest rates here

Gold love

Despite some profit booking globally, Indian investors have continued to increase their allocation to gold.

Globally, gold-backed ETFs recorded net outflows of around 45 tonnes during the April-June quarter as investors shifted towards riskier assets after gold prices corrected from earlier highs.

India, however, bucked the trend. According to World Gold Council data cited by Mirae Asset, Indian Gold ETFs attracted 4.2 tonnes of net inflows during the quarter, while investment value more than doubled year-on-year to approximately ₹6,300 crore. This suggests that domestic investors continue to view gold as a strategic portfolio diversifier and an effective hedge against uncertainty.

ALSO READ: India's ₹315 lakh crore gold stock could power the economy. Here's how Gen Z holds the key

Strong, but more volatile

Silver also has supportive fundamentals, though for different reasons.

Unlike gold, nearly 70-75% of global silver production is a by-product of mining other metals such as copper, zinc, lead and gold. This makes it difficult for miners to quickly increase production when prices rise.

According to the Silver Institute, the global silver market is expected to remain in supply deficit for the sixth consecutive year in 2026, with a projected shortfall of 46.3 million ounces.

India is also witnessing tighter supply. Domestic silver premiums have risen to around $3-$4 per ounce, compared with just 25-50 cents before recent import restrictions, reflecting stronger demand and limited availability.

Recent price trend

Gold prices have remained volatile over the past two weeks but have staged a sharp rally in recent sessions. After trading around ₹12,380 per gram on July 28, prices climbed to ₹13,287.28 per gram on August 7, reflecting renewed buying interest amid global uncertainty and continued central bank purchases.

MUST READ: These six Sovereign Gold Bond series become eligible for early redemption in August: Check dates, process

Silver has mirrored the upward trend, with prices rising from around ₹1.24 crore per kg on July 28 to ₹1.33 crore per kg on August 7, underscoring the impact of supply constraints and stronger industrial demand. While both precious metals have gained, analysts believe gold's stronger investment demand and safe-haven appeal currently provide it with a more favourable risk-reward profile than silver.

Gold and Silver Price Trend

Key risks to watch

Despite supportive fundamentals, both metals face macroeconomic risks. A stronger US dollar, higher real bond yields and a hawkish US Federal Reserve could weigh on prices by reducing the appeal of non-interest-bearing assets.

The US Federal Reserve kept interest rates unchanged at 3.50%-3.75% in July but left the door open for further tightening, suggesting that precious metals could remain volatile over the next six to 12 months.

Given the current backdrop, Mirae Asset believes gold offers a more favourable balance of risk and return than silver. For long-term investors, the fund house recommends a staggered investment approach, allowing investors to navigate short-term volatility while building exposure over time.

MUST WATCH: Exiting mutual funds may get cheaper as SEBI cuts maximum exit load cap to 3%