Silver prices likely to reach ₹1.25 lakh in next 12-15 months, may outperform gold, says MOFSL

Silver prices can reach ₹1,25,000 on MCX and $40 on COMEX in the next 12 to 15 months, potentially outperforming gold prices in the medium to long term, according to Motilal Oswal Financial Services Ltd (MOFSL).

MCX Silver has experienced a robust rally, advancing over 40% year-to-date and surpassing ₹100,000 domestically. This upward momentum is driven by strong safe-haven buying and sustained industrial demand.

MOFSL has set gold price targets of ₹81,000 in the medium term and ₹86,000 in the long term. On the international front, MOFSL expects COMEX gold prices to reach $2,830 in the medium term and $3,000 in the long term.

“2024 has experienced a significant price rally fuelled by market uncertainties, expectations of rate cuts, rising demand, and a depreciating rupee. The months following the US presidential election will be critical in shaping gold's near-term trajectory. Hereon, the two key factors underpinning this year’s rally in precious metals are expectations of rate cuts from the US Federal Reserve and rising geopolitical tensions, particularly in the Middle East. Overall, the sentiment for this Diwali is projected to be positive, raising optimism for bullion,” said Manav Modi, Analyst, Commodity Research, Motilal Oswal Financial Services.

Gold Performance During Diwali

If one had invested in gold during Diwali 2019, they would be enjoying around 103% returns on their domestic gold investments by this Diwali 2024.

According to MOFSL analysis of leap years and historical patterns of gold, since 2011, there have only been two instances (2015 and 2016) where the 30 days leading up to Diwali recorded negative returns. Aside from 2022, pre-Diwali gains have consistently outpaced post-Diwali gains.

“We continue to believe that gold has further upside potential wherein any dips could present buying opportunities. According to our recent quarterly report, a correction of 5-7% is plausible and could serve as an accumulation zone,” added Modi.

Factors Driving Gold & Silver Prices

Two primary factors are supporting this year’s surge in precious metals: anticipated interest rate cuts by the US Federal Reserve and heightened geopolitical tensions, particularly in the Middle East. Additionally, the 2024 US presidential election could influence these geopolitical dynamics.

MOFSL notes that US presidential elections, occurring in leap years, typically introduce heightened volatility in commodities—a trend that has historically benefited gold and silver. Between 2012 and 2016, there was only one period of negative returns for these metals during leap years, with the others reflecting positive momentum.

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