Its peer silver was late to join the rally, but still has seen a stupendous rally, rising about 80 per cent since March.
Gold and silver futures continued to rally despite sluggish demand in the jewellery market, as most weddings have been postponed due to Covid-19 restrictions and people are splurging less on non-essential items.
“Lower real rates, loose monetary policies and increasing gold holdings by central banks are driving the demand for yellow metal. As a result, we now see record purchase happening in paper gold in the form of ETFs,” said Sunilkumar Katke, Head of Commodities and Currencies at Axis Securities.
He said the major reasons for the rally in silver futures was restricted supplies due to mining disruptions, and expected industrial demand in solar energy and 5G infrastructure.
Silver futures on MCX hit an eight-year high of Rs 62,200 per kg, while gold futures hit a record high of Rs 50,085 per 10 gm, crossing the Rs 50,000 market for the first time ever.
Commodity market experts do not see any immediate halt to the rally and said traders should remain bullish on the precious metals.
Kishore Narne, Associate Director & Head, Commodities & Currencies at Motilal Oswal, said his brokerage continues to maintain a target of Rs 65,000 per 10 gm for gold in 18 months.
“We do expect anaemic economic growth to cause further isolation of economies and intensify protectionist policies and further aggravate trade war, which also helped gold in the past. We expect gold to keep up the momentum with occasional corrections,” Narne said.
In the international market, the yellow metal has given over 21 per cent return year to date. In the spot market, it traded at $1,850 per ounce on Wednesday.
Hareesh V, Head Commodity Research at Geojit Financial Services, said if gold breaks above $1,880 in the international market, the prices can go higher to $2,000 or more.
Other analysts said signs of an imminent rally in silver were evident from a skewed gold-to-silver ratio and the last spike was not surprising. Going ahead, silver futures are expected to move in tandem with gold, but the rally may not be as big as gold from now on, they said.
“We expect this momentum to continue in the weeks ahead and the rally might extend further towards Rs 63,500 per kg mark till this Diwali,” said Prathamesh Mallya, AVP – Research, Non Agri Commodities and Currencies, Angel Broking.
Katke of Axis Securities sees the white metal at Rs 65,000 in a couple of months.
Unlike gold, for which there are numerous investing avenues like ETFs, sovereign gold bonds, gold funds, etc., choices are limited in case of silver for Indian investors.
“Investment options in silver in India are very few. One is to buy physical jewellery or silver bars or coins. Second is trading in futures and options to benefit out of price volatility.” Mallya said.