In 2024, gold and silver have surged dramatically, with gold gaining 30% and silver rising by 35% on the Commodity Exchange (COMEX). This sharp increase reflects a combination of geopolitical risks, central bank actions, and an evolving global economic environment, according to a report by Motilal Oswal Financial Services Ltd (MOFSL).surged dramatically, with gold gaining 30% and silver rising by 35% on the Commodity Exchange (COMEX). According to a report by Motilal Oswal Financial Services Ltd (MOFSL), this sharp increase reflects a combination of geopolitical risks, central bank actions, and an evolving global economic environment.
Factors driving the gold and silver surge
Central bank policies largely drive the rally in gold and silver prices. Global demand for these precious metals has increased significantly, with central banks purchasing more than 500 tonnes of gold this year, particularly in emerging markets. This trend has been ongoing for over a decade, as central banks diversify their reserves amidst global economic uncertainty. The rise in demand from these institutions has added upward pressure on gold and silver prices, making them an attractive hedge against currency volatility.
Investor interest in gold and silver ETFs
In addition to central bank purchases, investor interest in gold and silver ETFs (Exchange-Traded Funds) has risen sharply. Gold ETFs, which had seen outflows in previous years, are now seeing renewed inflows. In India, assets under management (AUM) in gold ETFs have surpassed ₹30,000 crore, while silver ETFs have crossed ₹7,500 crore. This surge in demand is reflective of the growing preference for gold and silver as safe-haven assets.
Impact of government policies in India
The Indian government’s reduction of import duties on gold and silver has further fueled demand. This move, coupled with strong domestic demand during festive and wedding seasons, has driven both the domestic price and import levels higher. India has imported over 700 tonnes of gold and 6,000 tonnes of silver this year, contributing significantly to the price surge.
Looking ahead, the outlook for gold and silver remains positive, with some market consolidation and short-term dips expected to present potential buying opportunities. Loose monetary policies and ongoing geopolitical risks are likely to provide a favorable backdrop for the continued rise in precious metal prices. With central banks maintaining their bullish stance on gold and silver, the surge is expected to continue in the near future.
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