'You must allocate 8% of your portfolio in gold, 10-15% in silver in 2025'

As 2025 approaches, gold and silver continue to be prime investment choices due to the ongoing global economic and political volatility. With central banks, particularly China, increasing their gold purchases and expectations of rate cuts from the Federal Reserve, gold's outlook remains strong. Gold delivered a 20.8% return in 2024, reaching a record Rs 79,700, and may see further gains of 15-18% in 2025, according to Pranay Aggarwal, CEO, Stoxkart, a discount broker. Similarly, silver’s demand from industries such as electric vehicle infrastructure and green energy is set to increase, driving prices higher.

 

Gold’s Outlook for 2025

 

• Gold saw a stellar 20.8% return in 2024, hitting Rs 79,700.
• Analysts at Stoxkart predict further growth of 15-18% in 2025.
• Immediate support levels are Rs 68,500–Rs 65,000, with upward potential ranging from Rs 88,500 to Rs 92,000.

 

Silver’s Bright Future

• Silver’s demand is expected to grow significantly due to the shift toward sustainable energy, including EV infrastructure.
• Immediate support is forecast at Rs 78,000–Rs 82,000, with potential to rise to Rs 1,12,000–Rs 1,16,000.

 

Strategic Allocation for investors, as per Aggarwal

• Based on fundamental and technical analysis, investors should consider allocating 5-8% of their portfolio to gold and 10-15% to silver, tailored to their risk profile and investment horizon.
• Both metals provide long-term growth potential, acting as a hedge against geopolitical risks, inflation, and equity market volatility.
• With both gold and silver offering strong prospects, 2025 seems set to continue the trend of their outperformance in volatile markets.

 

Gold and silver are maintaining their appeal as safe-haven investments as the market navigates a mix of economic and geopolitical challenges. After a robust rally, several key factors that fueled bullion’s surge are beginning to moderate. Diplomatic progress in conflict zones and U.S.-China tensions have tempered the haven demand for precious metals. However, China's resumption of gold purchases and anticipated monetary policy shifts suggest renewed optimism for the sector in 2025. Central bank rate cuts and rising geopolitical risks could continue to fuel demand, especially for gold, with silver benefiting from increased industrial demand driven by sectors like electric vehicle infrastructure and green energy.

 

"The precious metals market has been a complex tapestry of subdued movement, cautious sentiment, and evolving geopolitical and economic influences over the past week. Both gold and silver prices exhibited a constrained trading range, with gold fluctuating between $2,665 and $2,600 and silver confined to $31.40– $29.68. This cautious behavior reflects tepid investor sentiment, highlighted by consistent outflows from gold-backed ETFs, according to the World Gold Council, underscoring the absence of a strong bullish conviction. This week began with a glimmer of hope for gold and silver, signalling potential recovery on the horizon," said Riya Singh - Research Analyst, Commodities & FX – Emkay Global Financial Services Ltd.

 

Ebbing Drivers of the Bullion Rally

 

Gold’s rally, which has driven prices to new heights, has begun to moderate. Several key factors, including diplomatic efforts for ceasefires in conflict zones like Russia-Ukraine and Israel-Hezbollah, have tempered the haven demand for precious metals. Furthermore, President-elect Donald Trump’s diplomatic pushes for international agreements have reduced market volatility, easing the demand for gold as a safe-haven asset.

 

Despite these developments, the geopolitical backdrop remains fraught with uncertainties. In Syria, the dramatic shift in power, with rebels taking control of Damascus and forcing President Bashar al-Assad into exile, has added pressure on allies such as Russia and Iran. This has highlighted the persistent risks that could reignite demand for gold and silver as investors seek to hedge against geopolitical instability.

 

Renewed Optimism for Bullion Demand

 

Amid these geopolitical complexities, positive signals have emerged. Notably, China, a key player in the global gold market, resumed its gold purchases after a six-month hiatus. This shift indicates renewed interest in precious metals, potentially spurring other central banks to follow suit and boosting overall demand. The People's Bank of China (PBOC) has also pivoted from its longstanding policy of caution, now aligning with the Politburo’s renewed focus on economic growth. Anticipated interest rate cuts from China could further fuel gold acquisitions, injecting vitality into the bullion market.

 

In addition to China’s actions, broader macroeconomic factors indicate a favorable environment for gold and silver. The ongoing U.S.–China tensions, exemplified by China's anti-monopoly probe into U.S. tech giant Nvidia, are fueling geopolitical uncertainty. These measures could exacerbate trade-related disruptions, maintaining bullion's appeal as a hedge against such volatility.

 

Trump-Led Volatility and Its Impact on Precious Metals

 

The continuation of Donald Trump’s trade rhetoric has contributed to sustained volatility in global markets, particularly in the U.S.-China trade relationship. China’s exports to the U.S., which are worth over $400 billion annually, are facing increased scrutiny due to tariffs and other restrictions. As trade tensions escalate, gold and silver continue to provide safe-haven assets for investors, offering protection against trade-related disruptions and currency fluctuations.

 

Technical Insights: Gold and Silver Outlook, as per Emkay Global

From a technical perspective, gold faces immediate resistance at $2,670–$2,700, with a sustained break above $2,700 potentially paving the way toward $2,900. On the downside, support levels are positioned at $2,600–$2,580, oƯering a cushion against sharp declines.

 

Silver’s trajectory remains supportive as long as it trades above $30, with targets set at $32.29–$33. The metal is expected to respect the $29 support level going forward, maintaining a firm base for future gains.