Gold is expected to outperform silver over the next six months due to persistent global economic uncertainty and concerns over US interest rates, according to Harshal Barot of Metals Focus. Barot noted that gold benefits from stronger institutional buying support, including central bank purchases, which silver lacks. While silver could eventually catch up if market conditions improve, its weaker institutional backing makes it more vulnerable during uncertain times.
The recent correction in precious metal prices may boost jewellery demand in India ahead of the festive season. Gold imports are projected to decline by at least 20% from last year's levels, while silver imports could drop even more sharply to around 4,000 tonnes, down from approximately 7,200 tonnes last year. Jewellery demand remains uneven, with lighter, more affordable pieces gaining popularity, particularly in the daily-wear segment.
Silver faces a more uncertain near-term outlook, with potential price declines in international markets. Barot identified ₹1.75 lakh per kg as a key level for Indian prices, with a worst-case scenario seeing prices drop to ₹1.5 lakh per kg. Despite the correction, investor demand for silver has remained subdued, partly due to large purchases made during last year's buying spree.
Wedding jewellery continues to be dominated by 22-carat gold, though lighter designs are gaining traction. Meanwhile, 18-carat jewellery is becoming more accepted, supported by improved designs and wider availability.