Mumbai (Maharashtra) [India], November 6 (ANI): Gold prices could rally towards USD 4,400–4,500 per ounce in the coming months if geopolitical tensions ease and crude oil prices decline, while silver may face heightened volatility due to concerns surrounding the artificial intelligence (AI) and technology sectors, according to Kaynat Chainwala, Commodity Expert at Kotak Neo.
Speaking to ANI, Chainwala said the outlook for precious metals remains highly dependent on developments surrounding the US-Iran conflict, crude oil prices and monetary policy signals from the US Federal Reserve.
"First, it has to reach USD 4,220. And then we are looking at USD 4,400–4,500 in gold," she said, outlining the potential upside for the yellow metal if geopolitical tensions subside.
For silver, Chainwala projected a possible recovery towards USD 55–57 per ounce, with the next resistance level around USD 61, provided geopolitical conditions improve.
However, she cautioned that silver faces additional risks from volatility in the AI and technology sectors because of its industrial applications.
"If that happens, it is going to kind of outweigh the impact of crude oil prices, and it will, you know, kind of slip towards USD 45," she said, referring to the possibility of a further sell-off in technology stocks.
Chainwala said gold offers a better risk-reward proposition than silver for investors heading into Samvat 2083, particularly amid uncertainty surrounding interest rates, geopolitical developments and crude oil prices.
She highlighted gold's role as a portfolio diversifier and continued purchases by central banks during periods of global uncertainty.
"So I think gold definitely remains the better among the two because silver, see, I would say that when you are talking about a precious metals portfolio, what one can do is consider putting around 80% to 85% in gold, because it's something that is far less volatile compared to silver," she said.
She subsequently suggested maintaining around 75–80 per cent of a precious metals portfolio in gold, while investors willing to take higher risks could consider allocating 15–20 per cent to silver.
On domestic festive demand, Chainwala said gold prices have corrected substantially from their earlier record highs, which could encourage buying during the festive season.
According to her, gold prices on the Multi Commodity Exchange (MCX) were around Rs 1.40 lakh, nearly 20 per cent below their earlier record highs of over Rs 1.80 lakh.
She also pointed to an approximately 10 per cent correction in gold prices over the preceding one to two weeks.
"See, festive demand is definitely going to be a little positive for prices. What we've seen in the last quarter also, in the September quarter, is that jewellery demand picked up. And this quarter, definitely, festive demand is going to be supportive," Chainwala said.
However, she does not expect a substantial increase in jewellery demand by volume, as elevated prices could encourage consumers to purchase lightweight and lower-carat jewellery.
"But we are not really expecting high-volume demand. It could be an increase in value, you know, like we've seen in the last quarters as well," she said.
Chainwala expects the improvement in jewellery demand witnessed during the September quarter to continue into the December quarter in value terms.
On the impact of import duties, she said domestic bullion prices could witness a sharp correction if the government reduced the import duty from 15 per cent to 6 per cent, although she was not expecting such a move.
She noted that changes in import duties could influence domestic gold and silver prices independently of movements in international spot markets.
Regarding the Indian rupee, Chainwala said the currency was trading around 94–95.5 against the US dollar and was expected to remain within that range.
However, she said a sustained decline in Brent crude towards USD 80 per barrel or below could trigger a sharp appreciation in the rupee, potentially limiting gains in domestic gold prices.
"Sharp appreciation in the rupee is always negative for domestic gold prices," she said.
Chainwala further highlighted the influence of crude oil prices on bullion markets, noting that the recent rally in oil had contributed to weakness in gold and silver.
She said Brent crude could remain above USD 100 per barrel if supply disruptions continued and there was no resolution to the US-Iran conflict.
However, a durable resolution could push crude prices towards their pre-war levels of USD 70–80 per barrel.
"If there is a quick resolution, then we are seeing a price of around USD 80," she said.
On the US midterm elections, Chainwala said market participants were concerned that the outcome could affect capital expenditure in the AI sector, potentially weighing on industrial metals, including silver.
She also noted that markets were pricing in an 80 per cent probability of a December interest rate hike by the US Federal Reserve.
According to Chainwala, investors would closely monitor the Fed's outlook for the following year, particularly whether interest rates would remain elevated or whether easing could become possible if prices declined.
She cautioned that uncertainty surrounding crude oil, monetary policy, geopolitical tensions and developments in the technology sector would likely keep precious metals volatile in the coming months.
"To give a six-month perspective, it will be very difficult because the markets have been very volatile," Chainwala said. (ANI)
Gold may rally to USD 4,500, silver faces downside risks amid AI sector volatility: Kotak Neo's Kaynat Chainwala
