Both gold and silver have outperformed their peers in the international market. The yellow metal price has risen by 10% on Comex while silver has gained by 1.8% in FY2024, so far.
Retail inflation for the current financial year is pegged at 5.4%, according to the estimates by the Reserve Bank of India (RBI).
In terms of returns, this is still not the best year for gold as it has delivered superior returns in the last two financial years — 15.2% in FY2023 and 15.6% in FY2022. An analysis of its returns since FY2012, shows that the highest returns by MCX gold have been 36.3% in FY2020 followed by 35.5% in FY2020. On three occasions, MCX gold has given negative returns with the highest price erosion in FY ending March 31, 2015 (-8.2%).
For Comex gold, the highest returns were delivered in FY2020 at 22% followed by 16% in FY2012 followed by 13.5% in FY2020. On three occasions, it gave negative returns. As for MCX silver, the highest returns were delivered in FY2021 at 61.5% followed by 15.2% in FY2017. Between FY2012 and FY2024, MCX silver has given positive returns on seven occasions with negative returns on the remaining six. The lowest return of -19.3% was posted in FY2017 and the next lowest was 13.2% in FY2015.For Comex silver, the returns have been positive only in four financial years with the highest returns of 74.7% in FY2021. In FY2014, Comex silver prices declined by over 30%, registering their biggest fall in a single financial year.
FY2025 Outlook
Outlook for gold and silver is positive amid an easing of the global monetary policy with rate cuts expected later this year. Moreover, recovery in the Chinese economy and geo-political concerns will likely keep the prices on the up, multiple analysts told ETMarkets. They remain bullish on the prospects of gold for the next financial year and recommend buying in gold and silver.
Gold which has an inverse relationship with the movement of the dollar index (DXY) will likely gain if interest rates are slashed as that would lead to a softening in the greenback.
Anuj Gupta, Head Commodity & Currency at HDFC Securities anticipates MCX gold to hit levels of Rs 67,000–67,500 over the next twelve months while expecting Comex spot gold prices to hit levels of $2,250-$2,300 levels. However minor corrections cannot be ruled out in the near term after the recent rally which has seen gold contracts hitting a lifetime high of Rs 66,943, Gupta said.
As for silver, the technical setup indicates broader range trading will continue until a decisive breakout above $27 happens, the HDFC Securities analyst said, estimating limited downside from here. His advice to investors is to keep investing in silver.
Naveen Mathur, Director – Commodities & Currencies at Anand Rathi Shares is more optimistic on the prospects of gold in the first half of the year as he sees yellow metal making new all-time highs but for the next financial year, he sees 7-8%. Mathur said that in the international spot markets, gold could test levels of $2,280 per troy ounce in the near term which translates to levels of Rs 68,200 – 70,100 for the MCX futures contract.
Gold also has an enormous advantage of central banks buying gold to diversify their reserves, Analyst Praveen Singh, Associate Vice President, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas said. According to Singh, Gold could test $2,600 in the international market while silver may climb to $35.
Singh however warns of risks that could come from a rebound in the US inflation amid strength in the US economy that could force the US Federal Reserve to shelve off/scale back its monetary easing plans. As he senses some correction in yellow metal prices in the near term, he recommended an accumulate-on-dips strategy depending upon the individual’s risk appetite. The short-term, medium term and long-term are $2,300, $2400 and $2,600, respectively.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
