Time to book profit in gold, silver after 61% jump in the last one year?

After a blitzkrieg run that saw gold (up 51 per cent in the last one year) and silver prices (up 61 per cent) to $4,047 an ounce (oz) and $50.8 an ounce respectively, analysts have turned cautious on both the precious metals and warn against a price correction in the short-term.

 

However, they remain bullish on gold and silver from a long-term perspective and suggest dips can be bought into.

 

“The near vertical ascent in both gold and gold mining stocks, and the current media chatter, naturally raises correction risks. Investors should view any sharp correction as an opportunity to accumulate,” wrote Christopher Wood, global head of equity strategy at Jefferies in his weekly note to investors, GREED & fear. 

 

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Wood maintains a long-term bullish view on gold bullion, with the price target of $6,600/oz on the continuing US dollar debasement trade.

 

India, meanwhile, cumulatively held 34,600 tonnes of gold as of June 2025, valued at nearly $3,785 billion at the current gold price, suggests a recent note by Morgan Stanley. 

 

This is nearly 88.8 per cent of India’s gross domestic product (GDP), the note said; and at the current market value is about 3.1x times the current equity stock holding with Indian households, which is valued at $1,185 billion.

 

According to the World Gold Council (WGC), India accounted for nearly 26 per cent of the world's global gold demand as of June 2025 on a four-quarter trailing basis, (versus a 5 year-average of 23 per cent), second only to China, with a share of close to 28 per cent. 

 

While jewellery comprises the bulk of demand for gold in India with a two-thirds share, the share of bars and coins, i.e., retail investment instruments, has picked up over the last 5 years from 23.9 per cent in quarter ended June 2020 to 32 per cent in quarter ended June 2025, data suggests. 

 

In terms of returns, during the past 50 years, according to WGC’s estimates, the price of gold in US dollars has increased by 8 per cent on an annualised basis – a performance comparable with equities and higher than bonds.

 

Silver price rally

 

The current rally in the global silver prices, according to G Chokkalingam, founder and head of research at Equinomics Research, is mainly on account of spurt in speculative demand. Gold prices, he believes, will find some support despite a 5 – 10 per cent correction in the short-term on account of buying by global central banks.

 

“Gold will still find support due to safe-haven buying, especially by major central banks. On the other hand, the rally in silver may continue for a couple of weeks at best, but higher prices would influence higher supply, which in turn will lead to around 10 – 15 per cent fall in silver prices within 2025,” he said. 

 

Apurva Sheth, head of market perspectives and research at SAMCO Securities believes that the recent buying frenzy in both gold and silver has been led by FOMO - buying out of fear of missing out.

 

This, he said, typically happens when markets, whether commodities or stocks, tend to peak — during buying frenzies when the late entrants rush in and the smarter, early investors start booking profits.

 

“Silver seems to be breaking out of a 50-year consolidation. I wouldn’t be surprised to see it move to $100–200 over the next five to ten years. Gold, on the other hand, should be steadier — not as explosive as silver, but likely in the $6,000–6,500 range in the next three to four years. A 10–20 per cent correction after a 50 per cent – 60 per cent rally isn’t a concern. The broader uptrend still looks intact,” Sheth said.