Tata MF Bullish on Gold and Silver Amid Volatility and Structural Demand

Tata Asset Management has maintained a bullish outlook on gold and silver despite recent market volatility, attributing their long-term optimism to several key factors. The fund highlights sustained demand from central banks, ongoing geopolitical tensions, and concerns over US fiscal stability as primary drivers for gold's appeal. Despite a 26% correction from its January 2026 peak of $5,595 per ounce to approximately $4,138 per ounce, Tata MF views current levels as an attractive entry point for long-term investors.

The fund points to robust central bank demand, with purchases reaching 289 tonnes in the second quarter of 2026 and projected full-year purchases of 700-900 tonnes. This is a significant increase from the pre-2022 annual average of 400-500 tonnes. Reserve diversification away from US-dollar assets, particularly by China and other emerging-market central banks, continues to bolster gold's appeal. Additionally, China's gold imports have already surpassed 1,000 tonnes in 2026, exceeding the full-year volume for 2025, further supporting demand.

For silver, Tata MF emphasizes the persistent supply deficit as the primary argument for its long-term bullish stance. The fund estimates that 2026 will mark the sixth consecutive year of a global silver deficit, driven by increasing industrial demand. China's control over 60-70% of global refining capacity adds another layer of supply risk. Despite near-term price volatility, the structural supply-demand imbalance underpins Tata MF's constructive outlook on silver.

Tata MF has cautioned investors against chasing recent price rallies, noting that sharp price movements can be followed by consolidations. The fund advises staggered investments and careful consideration of risks before increasing exposure to gold and silver.