Gold to catch up with Silver, may hit ₹1,50,000: SAMCO Securities

On the technical charts, Gold has confirmed a fresh breakout from a classic cup and handle formation, reinforcing the strength of the ongoing uptrend, says Apurva Sheth of SAMCO Securities.

The long term Gold Silver ratio chart is once again approaching a zone that has historically marked major turning points. Since 2014 this ratio has repeatedly found strong support around 65. This was followed by phases where gold meaningfully outperformed silver.  Silver has already delivered a strong run over the past few months, driven by its dual role as a precious metal and an industrial input. However, the current setup suggests that silver’s relative outperformance may be approaching exhaustion.   

 

  In a world where yields are rising and inflation is expected to shoot up, owning hard assets is a must. So we are not saying that silver will fall but on relative basis gold could do better than silver from a medium term perspective  ALSO READ | Why a 70:30 gold-silver mix works best for investors, explains Pratik Oswal  Thus, anyone who is building his precious metals portfolio then out of the two he must add gold at this stage. 

Gold confirms breakout on charts

  Gold has confirmed a fresh breakout from a classic cup and handle formation, reinforcing the strength of the ongoing uptrend. After a strong rally through September and October, prices entered a healthy consolidation phase. This pause allowed excess froth to cool while forming a well rounded cup followed by a shallow handle, a structure typically seen in strong trending markets. 

 

 

  The breakout has now occurred above the prior resistance zone near ₹1,32,000 to ₹1,33,000 on MCX Gold Futures. This level had earlier acted as a supply zone where prices struggled to move higher. The decisive move above this band signals renewed buying interest and acceptance at higher levels. Volume expansion on the breakout further adds conviction to the move.  Measured move projections from the depth of the cup indicate potential upside of around 11-13 per cent over the medium term. Fibonacci extensions also point towards higher levels in the ₹1,44,000 to ₹1,50,000 zone, provided the breakout sustains.  ALSO READ | Gold returns trump equities, real estate over a 20-year period: Report  Importantly, the broader trend remains firmly positive. Higher highs and higher lows continue to define the structure, and previous resistance is likely to act as support on any pullback. As long as prices remain above the breakout zone, gold appears well positioned to continue its upward trajectory.  Just like Silver did a few weeks ago, Gold seems to be entering the next leg of its structural uptrend after a time based consolidation.  (Disclaimer: Apurva Sheth is head of market perspectives & research at SAMCO Securities. The views expressed by the brokerage/ analyst in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)