Gold Shines as Interest Rates Turn Soft, Silver Stays Volatile

The precious metals market remains resilient despite recent profit booking and short-term volatility. Gold has found strong support around $4,060 per ounce, while silver has held the $58 level over the past four to six weeks.

According to Emkay Wealth Management, gold's rally is driven by underlying fundamentals, including central bank buying and demand for diversification of reserves. The current rally has also completed only a portion of its average historical cyclical period, suggesting that the longer-term cycle may still have room to play out.

Silver, on the other hand, has witnessed significant long-term appreciation but is more sensitive to industrial demand and market sentiment, resulting in greater short-term volatility. Gold ETFs have delivered strong returns over the longer term, with leading schemes delivering above 43% over one year and more than 32% over three years.

The outlook for gold remains favourable if global monetary policy shifts towards a softer interest-rate regime for an extended period, which could reduce the opportunity cost of holding non-yielding assets. Gold is estimated to have another 12% upside potential, while silver could encounter resistance around $68 and $74 per ounce.