Gold May Rally to USD 4,500, Silver Faces AI Volatility: Kotak Neo
Kotak Neo's Kaynat Chainwala predicts gold could rally to USD 4,500 while warning of silver's volatility due to AI sector shifts.
The outlook for precious metals is shifting, with gold price prediction models suggesting a massive potential rally. According to Kaynat Chainwala, Commodity Expert at Kotak Neo, gold could surge towards USD 4,400–4,500 per ounce in the coming months, provided certain geopolitical and economic conditions align.
The Path to USD 4,500 for Gold
Speaking to ANI, Chainwala outlined a tiered trajectory for the yellow metal. She noted that gold first needs to reach the USD 4,220 mark before it can aim for the higher targets of USD 4,400 to 4,500. This bullish movement is contingent upon a few key global triggers:
- A decrease in geopolitical tensions, particularly surrounding the US-Iran conflict.
- A decline in crude oil prices.
- Monetary policy signals emanating from the US Federal Reserve.
Silver's Struggle: The AI Factor
While gold looks promising, silver presents a more complex scenario. Chainwala projected a possible recovery for silver toward USD 55–57 per ounce, with a subsequent resistance level at USD 61, assuming geopolitical conditions improve.
However, silver is uniquely exposed to industrial demand, making it vulnerable to volatility in the technology and artificial intelligence (AI) sectors. Chainwala cautioned that if the AI sector faces a downturn, it could outweigh any positive impact from crude oil prices, potentially causing silver to slip toward USD 45.
Investment Strategy for Samvat 2083
Given the differing risk profiles of the two metals, the Kotak Neo expert suggests a skewed allocation for investors heading into Samvat 2083. Because gold acts as a more stable portfolio diversifier—supported by consistent central bank purchases—it is viewed as a better risk-reward proposition.
"I think gold definitely remains the better among the two because silver... is far more volatile," Chainwala stated.
Her recommended portfolio split for precious metals is as follows:
- Conservative approach: 80% to 85% in gold.
- Balanced approach: 75% to 80% in gold, with 15% to 20% in silver for those willing to take higher risks.
Domestic Trends and Festive Demand in India
In the Indian market, gold prices on the Multi Commodity Exchange (MCX) have seen a significant correction. Currently trading around Rs 1.40 lakh, prices are nearly 20% below their record highs of over Rs 1.80 lakh, with a further 10% dip observed in the last one to two weeks.
This correction is expected to spark buying during the festive season. While Chainwala expects value-based growth in jewelry demand to continue from the September quarter into December, she does not anticipate a surge in volume. High prices are likely to drive consumers toward lightweight and lower-carat jewelry.
Import Duties and Currency Impact
Chainwala also addressed the potential for a sharp domestic correction if the government decides to slash import duties from 15% to 6%, though she noted that such a move is not currently expected. Such a change would decouple domestic prices from international spot market movements.
Regarding the Indian rupee, it is currently trading in the range of 94–95.5 against the US dollar. However, she pointed out that if Brent crude prices drop sustainably to USD 80 per barrel or below, the rupee could see a sharp appreciation.