Gold prices have touched an all-time high, sparking fresh debate among investors on whether the rally has more room to run or if it is time to be cautious.
The yellow metal, traditionally seen as a safe haven in uncertain times, has surged sharply in the past year, supported by global factors ranging from geopolitical tensions to central bank buying. With the festive season in India underway, demand from households is also expected to remain strong.
A YEAR OF STRONG GAINS
In the last one year alone, gold and silver have delivered nearly 50% gains. Analysts attribute this sharp rise to ongoing global uncertainties such as trade disputes, tariffs, and geopolitical tensions that have lasted for more than 1,000 days. Central banks across the world have also been steadily adding gold to their reserves, further boosting prices.
Ajay Kedia, Founder and Director of Kedia Advisory, said the combination of economic slowdown fears, interest rate cuts, and demand for safe assets has fuelled this unprecedented rally. “Definitely, this is the onset of the festive season with Navratri and as we know, we Indians love gold. And with the love of gold to wear and getting the return also, because in last one year, we have seen almost 50% gains in gold and silver because of geopolitical tensions since last 1000 days. Central banks are consistently buying. So, I think everything has been supportive and we have seen this type of value. But currently, I feel cautious as of now because as an asset class, whenever any asset class gives a return like this is a point to be reviewed,” he explained.
He also pointed to the recent rate moves in the United States as another supporting factor. “Last week, we saw the Federal Reserve cut rates by 0.25%, with hopes of another 0.5% cut ahead. All these are supporting gold right now,” he said.
IS THIS THE RIGHT TIME TO BUY GOLD?
The big question for investors is whether it is safe to enter gold at current levels. According to Kedia, caution is advised. “Gold at current level does carry some risk also because this is a safe haven buying. With a 15% year-on-year gain already, investors should be careful. In April also, we saw almost a 10% correction from 3500 to 3120. So, I think a corrective dip will be a good level to re-enter, like around 8% to 10% pullback. That will be a good level. Current level, we don’t expect is a great level to re-enter for long-term returns,” he said.
This means that while gold remains attractive as a hedge, waiting for a correction before making fresh investments could be a more prudent strategy.
GOLD OR SILVER – WHICH IS BETTER NOW?
While gold has seen extraordinary gains, Kedia believes silver may offer better opportunities going forward. “Silver is also called the poor man’s gold, and we have seen industrial demand continuously catching up, whether it is for solar or other uses. In 1980 and 2011, silver touched the $50 mark. So, I would prefer silver over gold right now,” he said.
With industrial demand rising, especially in areas like renewable energy, silver is expected to benefit from both its role as a precious metal and an industrial commodity.
(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)
