In the past few weeks, both gold and silver prices have experienced significant increases. Gold has hit nearly Rs 90,000 per 10 grams on the Multi Commodity Exchange (MCX), while silver has crossed the Rs 1-lakh-per-kg mark. This surge in prices has sparked debates among investors about whether now is the right time to invest in these precious metals or if waiting for a market correction is a better strategy.

Key Drivers Behind the Price Surge

The primary reason behind the sharp rise in gold and silver prices is the global economic uncertainty. Analysts point to several key factors contributing to the surge:

US Tariffs and Inflation: The ongoing trade tensions, particularly the tariff policies of former US President Donald Trump, are driving fears of increased inflation and economic instability. These factors have made gold an attractive safe-haven investment. Trump’s remarks about holding Iran accountable for any military actions related to Yemen, along with escalating tensions in the Middle East, have only added to investor anxiety, pushing gold prices higher.

Central Banks’ Gold Purchases: Central banks worldwide have been actively increasing their gold reserves, contributing to the surge in gold prices. The global push for gold accumulation is often seen as a hedge against inflation and a safeguard against currency risks.

Post-Pandemic Demand: The demand for gold has risen significantly after the pandemic, as investors seek stable assets to protect against uncertainty. The ongoing geopolitical risks, especially in the Middle East, are also driving gold’s appeal.

Federal Reserve’s Interest Rate Decisions: The Federal Reserve’s actions regarding interest rates are another important factor in gold price movements. Analysts expect the Fed to maintain interest rates in the 4.25%-4.50% range, which makes gold more attractive as an investment compared to low-yielding assets.

Price Target for Gold

Many brokerages and analysts are projecting a further increase in gold prices in the coming months. Some of the key projections include:

• 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 Indian rupee terms, analysts expect the price of gold to eventually reach the Rs 1 lakh mark in the medium to long term. However, in the near term, they anticipate prices to remain around Rs 90,000 per 10 grams.

Renisha Chainani from Augmont suggests that gold prices may continue their upward trajectory towards Rs 88,800 to Rs 90,000, but a potential correction could occur, leading to a retracement back to Rs 88,000 or lower.

Gold Outlook – What Should Investors Expect?

The outlook for gold remains optimistic, but with some caution. While the rally may continue in the short term due to global uncertainties, experts warn that gold's price rise could slow down once diplomatic efforts stabilize the market and inflationary pressures ease.

• Chirag Mehta, CIO of Quantum AMC, suggests that the gold rally may lose steam if diplomatic talks lead to greater market stability.
• Ventura Securities also points out that a strong US dollar and the Fed's decisions on interest rates could limit further price increases.

Despite this, Kishore Narne from Motilal Oswal feels that gold still offers a favorable risk-reward ratio, particularly in a volatile market.

Silver Price & Outlook

Silver has followed gold’s lead, with its prices crossing the Rs 1 lakh mark in the spot market. Currently hovering around Rs 1,03,000 per kilogram, silver has shown significant upside potential, albeit with more volatility than gold.

• Kishore Narne believes silver offers better potential for growth, albeit with more risk involved. His revised target for silver prices is Rs 1,25,000 per kilogram.

While gold remains a more stable investment, silver’s higher volatility could lead to greater returns for those willing to ride out the fluctuations.

Should You Invest in Gold or Silver Now?

Given the current market dynamics, investors are faced with two key questions:

• Should I invest in gold now, or wait for a correction?
• Is silver a better investment given its higher potential for growth?

For those seeking stability, gold remains a safer option in the current environment. However, with analysts projecting further increases in both gold and silver prices, waiting for a correction might not yield a significant drop in prices. On the other hand, investors with a higher risk appetite might consider silver, which has more potential for significant growth, but also comes with greater volatility.

In summary, both gold and silver are expected to remain strong investments in the near future, with gold offering stability and silver presenting higher risk-reward potential. Depending on individual risk preferences and investment goals, both metals could be worthwhile additions to a diversified portfolio.