Why Are Gold Prices Surging? Should You Invest More or Sell Now?
Gold and silver prices have seen a remarkable surge in recent weeks, with gold approaching the ₹90,000 per 10-gram mark on MCX and silver surpassing ₹1 lakh per kilogram. In the international market, gold prices hover around $3,025 an ounce, with projections suggesting a climb to $3,500 an ounce. This sharp rise has left investors wondering whether to buy more gold or wait for a correction.
Why Are Gold Prices Rising ?
Several global factors have contributed to the soaring gold prices. Economic uncertainties, geopolitical tensions, and inflation concerns have fueled demand for the precious metal.
- Impact of Global Events: “Gold maintains its winning streak above $3025 (~Rs 88,500) as Trump’s tariffs are projected to exacerbate inflation and economic turmoil. Trump said he would hold Iran accountable for any strikes carried out by the Houthi group it supports in Yemen, as his administration escalated the largest US military operation in the Middle East since Trump came to the White House," said Renisha Chainani, head of research at Augmont.
- Central Banks & Inflation Worries: Many central banks are stockpiling gold as a hedge against economic instability, further driving up prices. The post-pandemic economic recovery has also contributed to increased demand.
- US Fed Policy Impact: The US Federal Reserve is expected to maintain interest rates in the 4.25%-4.50% range, which could influence gold’s trajectory. “Geopolitical risks remain elevated, with the US reaffirming military action against Houthi forces. Pentagon spokesperson Parnell warned of severe consequences for any attacks on US troops. Meanwhile, Israel detected heightened Hamas activity near Gaza, potentially signaling new strikes. Today, Gold futures surge to all-time high of $3024 amidst heightened investor anxiety stemming from concerning US economic data and escalating Middle East tensions. Now, market focus now turns to the Fed’s policy meeting for insights into future monetary policy," Kotak Securities noted.
Gold Price Predictions
Analysts predict further upside potential for gold, with major financial institutions forecasting price targets:
- Bank of America: $3,000 per ounce
- Macquarie: $3,500 per ounce
- Goldman Sachs: $3,100 per ounce
- BNP Paribas: $3,100 per ounce
- Citi: $3,200 per ounce
In India, gold prices are expected to cross ₹1 lakh per 10 grams in the medium to long term. However, in the short term, analysts anticipate gold hovering around ₹90,000 per 10 grams.
“Gold Apr Futures after achieving the $3000 (Rs 88,000) milestone, now is expected to extend this run up towards $3035 (Rs 88,800) and $3080 (Rs 90,000) in the coming weeks. After that, we can see some retracement and profit-booking, which can extend down to $2800 and $2700 maximum," said Augmont’s Renisha.
Should You Buy or Sell Gold Now?
The outlook on gold investment remains mixed.
- Potential for Slowdown: Chirag Mehta, CIO of Quantum AMC, suggests that gold’s rally may slow as diplomatic negotiations ease market tensions and inflation remains controlled.
- Risk of Correction: Ventura Securities warns that a strong US dollar and uncertain Fed rate cuts may limit further price growth.
- Long-Term Safety Bet: Motilal Oswal’s Director, Kishore Narne, still sees a favorable risk-reward ratio for gold investors.
Silver’s Performance & Future Outlook
Silver has also witnessed significant gains, recently crossing ₹1.03 lakh per kg in the spot market.
- Higher Upside in Silver?: While gold remains a stable investment, silver is seen as having more growth potential despite higher volatility.
- Revised Target: “Though risk-reward ratio is better in gold, upside potential is better in silver with a bit of volatility. We have revised upwards our target from Rs 1 lakh earlier to Rs 1,25,000 per kg now. So, gold is for those looking for stability as stability is still better in gold. However, more upside potential is in gold," said Kishore Narne of Motilal Oswal.
With gold and silver prices at record highs, investors should weigh geopolitical risks, inflation concerns, and central bank policies before making any investment decisions. While gold offers stability, silver presents higher growth potential. Whether to buy or sell depends on individual risk appetite and investment goals.