As Diwali approaches, silver is taking center stage as the investment choice for those looking to maximize returns. In 2024, silver has outpaced other asset classes with impressive returns, recently crossing the Rs 1 lakh per kilogram mark, while experts predict it may reach Rs 1.25 lakh per kg by next Diwali. Let’s dive into why silver is predicted to perform better than gold in the coming year, and what factors are likely to influence these metal prices.
Silver’s 2024 Surge: Why Has it Outperformed Gold?
Silver’s remarkable growth in 2024 has been striking, with a nearly 40% return for investors, compared to gold’s 25% increase. In contrast, traditional investment vehicles like the Sensex and Nifty have seen returns of 11.5% and 12.5%, respectively, making silver a star performer this year. According to financial experts at Motilal Oswal, the strong demand for silver across industries, coupled with market uncertainties, has driven up its value. With industrial demand expected to grow and silver viewed as a “safe haven,” it is anticipated to continue performing well in the medium to long term.
Predictions for Silver and Gold Prices by Diwali 2025
Analysts at Motilal Oswal Financial Services predict that silver prices could reach Rs 1.25 lakh per kg on the Multi Commodity Exchange (MCX) within the next 12-15 months. On the international COMEX, silver may hit $40 per ounce, showcasing its potential as a profitable investment choice.
In comparison, gold is projected to rise more modestly. Experts estimate mid-term targets of Rs 81,000 per 10 grams for gold, with long-term prices possibly reaching Rs 86,000 per 10 grams. COMEX gold could reach $2,830 in the mid-term and $3,000 in the long term, as prices have risen steadily since 2016, barring a brief dip in 2021.
Key Factors Behind Rising Silver and Gold Prices
Several factors have influenced the rising demand for both silver and gold in 2024, and they are expected to continue impacting prices in the future. These include:
- Global Economic Uncertainty: Geopolitical tensions, especially in the Middle East, have led investors to turn to precious metals as safe investment options.
- Industrial Demand: Silver is widely used in electronics, solar panels, and other manufacturing sectors, making it particularly valuable.
- Interest Rate Cuts: Expectations of rate cuts by central banks have fueled demand for precious metals. Lower rates typically boost gold and silver as safe investments.
- Weakened Rupee: The Indian rupee’s depreciation has made silver and gold investments more attractive domestically, further pushing prices up.
According to Manav Modi, a commodity research analyst at Motilal Oswal, silver has been a preferred choice among investors looking for stable and appreciating assets due to its blend of industrial and safe-haven appeal.
What’s in Store for Gold by Diwali This Year?
The festive season, especially Diwali, traditionally increases demand for gold, often considered auspicious. This year, however, high gold prices may impact buying patterns, especially with two major global events— the U.S. presidential election and the Federal Reserve’s final policy meeting of 2024—expected around the same time. Both events are likely to shape short-term movements in gold prices, potentially causing minor fluctuations in domestic demand.
For those who bought gold during Diwali 2019, there’s good news: they would have enjoyed a solid 103% return by this Diwali. However, experts believe that if prices experience a slight drop—possibly between 5-7% in the short term—it may present an opportunity to invest in gold before a likely rebound. Historically, gold prices have generally shown stronger growth before Diwali than afterward, with only 2015 and 2016 recording negative returns in the 30-day lead-up to Diwali.
Silver or Gold? Which One is Right for You?
Both gold and silver offer unique investment advantages. While silver’s industrial demand and growth potential may make it a favorable choice in 2024-2025, gold’s consistent performance and status as a secure asset make it ideal for risk-averse investors. However, silver’s recent trend of outperforming other asset classes, along with the increasing industrial demand, could make it a compelling option for those seeking higher returns.
For investors deciding between gold and silver, here are a few points to consider:
- Short-Term Growth Potential: Silver has a promising outlook for substantial returns over the next year.
- Long-Term Stability: Gold remains a stable investment, with moderate growth potential even during economic downturns.
- Industrial vs. Safe Haven Demand: Silver benefits from industrial applications, whereas gold is favored as a hedge against inflation and economic uncertainty.
Summary of Factors Influencing Gold and Silver Prices
- Expected interest rate adjustments
- Geopolitical uncertainties and tensions
- U.S. election outcomes
- Growing industrial demand for silver
- Seasonal buying patterns for festivals
(Disclaimer: The above information is based on predictions and expert analysis. Please consult a financial advisor before investing, as markets carry inherent risks.)
