Anuj Gupta: A Preference for Silver Amid Rising Gold Prices
As the financial year approaches its end, Anuj Gupta, the Head of Commodity and Currency at HDFC Securities, has shared his insights regarding the gold and silver markets, highlighting a distinct preference for silver in the current economic climate. Gupta notes the substantial rally in gold prices this year, which has made it less accessible for many investors, particularly as trading margins continue to increase.
Current Market Dynamics
Gold has surged past the Rs 90,000 mark per 10 grams in the physical market and is expected to reach similar levels on the Multi Commodity Exchange (MCX). This growth comes in light of monetary policy decisions from the U.S. Federal Reserve, which have maintained interest rates but hinted at potential cuts later this year. These cuts could stimulate demand for gold and silver as safe-haven assets amidst ongoing inflation concerns and geopolitical uncertainties.
Gupta explained, "The Fed’s policy has resulted in a notable decline of the dollar index, triggering a sharp increase in gold and silver prices. This situation reflects the growing demand for these metals as safe-haven investments."
Performance Overview
In FY25, both gold and silver have exhibited impressive gains, outperforming many other asset classes. Gupta reported that while indices like the Nifty have seen downward trends, gold has appreciated by approximately 21%, while silver has risen by about 22%. Looking ahead, Gupta is optimistic, predicting that gold could reach Rs 90,700 (equivalent to approximately $3,100 per troy ounce) and silver could approach Rs 1,08,000 in the coming months.
The Gold vs. Silver Debate
While Gupta acknowledges that recent increases in gold prices might render it more expensive for some investors, he suggests that silver presents a more attractive opportunity due to its lower margins and significant growth potential. Silver currently shows greater room for appreciation as it is trading below its historical highs, unlike gold, which is at a lifetime peak.
"There is potential for a sharper rally in silver, especially since it is influenced equally by both precious and base metals. In the current context, I would pick silver over gold for medium-term investments," he stated.
New Trading Options
To accommodate smaller investors and traders, exchanges are launching a new Gold Ten contract effective April 1. This initiative aims to lower the barrier to entry for those who find current gold prices prohibitive. Gupta observed, "Due to higher prices and increased margins, we anticipate a 5-10% drop in volume for larger gold contracts, prompting traders to explore smaller denominations."
Challenges in Consumption
In light of rising costs, there has been a noticeable shift in consumer preferences towards lower-karat gold jewelry. The World Gold Council reports that as gold becomes less affordable, demand for 22-carat gold has declined, whereas 18 and 16-carat options are gaining traction ahead of the Akshaya Tritiya festival on April 30. Gupta elaborated, "Jewellers are now crafting designs that cater to this demand, thereby adapting to changing consumer preferences."
Trading Strategy
For those considering investments in gold and silver, Gupta advises cautious optimism. He suggests that buyers can enter the market now, with expectations to see gold test the Rs 90,700 mark, while maintaining a stop-loss at Rs 83,500. For silver, traders should implement a stop-loss around Rs 92,100. For long-term investors, he recommends a systematic investment plan (SIP) approach to accumulate gold over time, particularly during price dips.
As Gupta summarizes the current market landscape, he affirms the ongoing interest in gold and silver as investment vehicles amidst economic uncertainty, indicating that strategic trading can yield beneficial outcomes for investors willing to navigate the fluctuations.
(Disclaimer: The opinions expressed in this article are based on interviews and reflect Anuj Gupta’s insights and do not represent the views of Smart Money Mindset or its affiliates.)
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