Mehta said the lack of demand has surprised the industry, especially at a time when wedding-related purchases and other auspicious buying periods have begun. “There is no demand at all, neither investment demand of bars and coins or the jewellery demand,” he said, adding that ETF demand has also remained subdued.
The recent fall in gold and silver prices has been driven largely by the strengthening US dollar. Mehta said many market participants had expected precious metals to recover once oil prices fell after the Iran-US conflict eased, but that has not happened. Instead, a stronger dollar has weighed on sentiment and reduced interest from central banks and investors.
Despite the near-term weakness, Mehta remains bullish on gold and silver over the longer term. He pointed to the growing US debt burden, which is approaching $40 trillion, and rising interest costs as factors that could eventually support precious metals. “I am still bullish on my targets,” he said.
According to Mehta, the market could be close to a turning point. “Those days are not far away when you will suddenly find a U-turn of gold and silver,” he said, while cautioning that investors should continue to monitor the dollar index, US bond markets and Federal Reserve policy signals.
On the domestic front, Mehta believes buyers are waiting for prices to fall further before returning. He expects investment demand to improve if gold prices move closer to the ₹1.38-1.39 lakh per 10g range and silver prices fall towards ₹2.1-2.12 lakh per kg.
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Silver faces an additional challenge. Mehta warned that restrictions on silver imports are beginning to tighten domestic supplies, particularly for industrial users. Silver, which was trading at a discount only a week ago, is now commanding a premium of ₹8,000-10,000 per kg in the local market.
For now, the biggest surprise in the bullion market is not the sharp correction in prices, but the fact that lower prices have yet to trigger meaningful buying. However, Mehta believes demand could return quickly if prices reset further and investors begin to see value at lower levels.
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