Emkay Wealth said gold has found strong support around $4,060 an ounce, while silver has held the $58 an ounce level over the past four to six weeks. It said the resilience of both metals despite recent corrections suggests that the current consolidation could provide a base for the next phase of the cycle.
“Gold and silver have continued to demonstrate resilience despite profit booking and uncertainty around the interest-rate trajectory,” said Vivek Choksey, Regional Manager, Emkay Wealth Management, Ahmedabad.
Silver has delivered stronger returns, but with higher volatility
Silver has significantly outpaced gold over the past year, although its greater sensitivity to industrial demand and market sentiment also makes it more volatile.
As of July 31, ICICI Pru Silver ETF had delivered a one-year return of 95.24%, while Nippon India Silver ETF returned 94.55%. Over three years, the two schemes delivered 42.09% and 41.71%, respectively.
Silver funds tracked by Emkay Wealth also recorded one-year returns of more than 90%.
Gold ETFs, meanwhile, delivered one-year returns of more than 43%. HDFC Gold ETF returned 43.47%, Kotak Gold ETF 43.53% and Nippon India ETF Gold BeES 43.24%. Over three years, the respective returns were 32.37%, 32.49% and 32.27%.
Why Emkay remains positive on gold
Emkay Wealth said gold’s long-term outlook remains supported by structural factors, including continued central bank buying and demand to diversify reserves.
It also said the current gold rally has completed only part of its average historical cyclical period, suggesting that the longer-term cycle could have further room to run. Profit booking could continue to cause short-term volatility, but the broader support structure remains healthy, it said.
A sustained shift towards a softer global interest-rate environment could provide another boost to precious metals. Lower interest rates reduce the opportunity cost of holding non-yielding assets such as gold.
Choksey said gold continues to benefit from its role as a strategic reserve asset, while sustained central bank accumulation provides fundamental support.
For investors, Emkay Wealth said the recent correction should be viewed as part of the normal cyclical movement of precious metals rather than necessarily as a change in the long-term trend. It said gold and silver can continue to have a role in portfolio diversification, depending on an investor’s risk appetite, investment horizon and overall asset allocation.
