Samvat 2082: Consider buying gold and silver as correction takes root

Experts see near-term correction from profit-booking, but long-term bullishness intact

Samvat 2081 delivered the strongest returns in three decades for gold and silver. At Monday’s close, gold prices in Mumbai were up 60.4 per cent, while silver surged 68.7 per cent compared to the closing price at the end of the previous Samvat 2080.  As Samvat 2082 begins, optimism persists -- though sharp swings are expected in both precious metals as investors book profits.

 

The extraordinary bull run has been driven by several forces, led by the debasement of the US dollar. Yet, the relentless rally and all-round buying have pushed both metals deep into overbought territory.

 

Gold and silver have drawn strength from their safe-haven appeal amid the US government shutdown, aggressive central bank purchases, and unrelenting investment demand. Market experts warn, however, that an anticipated correction could unsettle new entrants.

 

“Recent entrants, if they continue to hold a long-term view, could get over any near-term retracements and corrections that are expected to be sharp... Friday night’s sharp correction in silver was a classic example of what lies ahead for late bloomers,” said Gnanasekar Thiagarajan, head, Commtrendz Research.

 

When US markets opened Friday evening, MCX gold futures tumbled ₹ 7,000 per 10 grams, while silver plunged ₹ 17,000 per kg, before both clawed back from intraday lows. On Tuesday, spot gold in international trade was down more than 2 per cent at around $4,260 an ounce, after hitting a record $4,381.60 on Monday. Silver, too, fell roughly 8 per cent from Friday’s $54.50 per ounce to about $50.25 in intraday trading. 

Nigam Arora, US-based algorithmic analyst and founder of the Arora Report, said: “The primary narrative driving gold and silver higher is dollar debasement. Based on The Arora Report algorithms, there’s a 65 per cent probability this narrative will continue, but it is not possible at this time to confidently predict the intensity of this narrative.”

 

Painting alternative scenarios, Arora added that if dollar debasement accelerates, gold could touch $6,000 per ounce and silver may hit $75. But both metals are “technically very overbought”, making a sharp pullback possible anytime. Gold could retrace to $3,500 and silver to $40.

 

“An even sharper correction can occur if inflation heats up and the US Federal Reserve is unable to lower interest rates as anticipated,” he said.

 

In short, investors must brace for volatility. The long-term story remains bullish, but the ride could test nerves.

 

“The outlook for gold and silver is cautiously bullish, with a 10-20 per cent correction looking more likely,” Thiagarajan said. “Once the froth disappears, genuine buyers could be seen entering again… The undercurrent remains strong despite the possibility of an expected correction.”

 

Most experts agree that “buying on dips” remains the preferred strategy, particularly for silver.

 

“The silver bull run has just begun,” said Chirag Thakkar, director of Amrapali Gujarat, one of India’s largest silver dealers. “After facing resistance at $50 for half a century, silver has finally broken through decisively. Any correction to $50 or below should be short-lived. Every dip is a buying opportunity.”

 

According to Thakkar, silver’s surge has been fuelled primarily by investment demand, with industrial demand adding tailwinds. He expects silver to test $60 soon and reach $75 within the next 12 months.

 

One factor behind silver’s momentum is speculation that the US might designate it a “critical mineral”. Should that happen, exports could be restricted, drying up London silver inventories and driving prices even higher. Similar fears once surrounded gold, but those never materialised.

 

For now, physical silver demand remains red-hot. The white metal commands a premium across major markets including India, China, Southeast Asia, and Dubai. Elevated prices in Dubai, where premium is unusual, underscore the growing scarcity of supply. 

No glitter jitter

• Outgoing Samvat gave multi-decade high returns
• Near-term profit booking may lead to sharp swings
• Algos suggest 65% probability of dollar debasement narrative continuing