Gold and Silver Prices May Be Volatile Due to Interest Rates and Inflation Trends

Motilal Oswal Financial Services Ltd (MOFSL) is advising investors to adopt a staggered approach when investing in gold and silver. The company's recent Precious Metals Report highlights that inflation trends, US interest rates, and real yields have become key price drivers for precious metals.

According to MOFSL, while gold's long-term outlook remains supported by central bank buying, fiscal concerns, and its role as a hedge against currency depreciation, near-term price movements may be volatile due to uncertainty around monetary policy. The brokerage expects gold to see a correction of 6-8% from current levels before moving higher over the next 12-15 months.

MOFSL has identified accumulation levels for Indian investors between ₹1.30 lakh and ₹1.33 lakh per 10 grams, assuming dollar/rupee at 95.5. The company projects medium-term targets of ₹1.68 lakh per 10 grams, followed by ₹1.93 lakh per 10 grams.

When it comes to silver, MOFSL notes that the metal has both investment and industrial demand, making its price movements more volatile than gold's. Silver prices will continue to be influenced by industrial demand, global economic conditions, investment flows, and monetary policy.