Gold and silver near all-time highs: This brokerage suggests investment strategy
Gold and silver prices have surged to all-time highs, driven by global trade concerns, a weaker dollar, and expectations of a Federal Reserve rate cut.
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Motilal Oswal Financial Services advises investors to maintain a “buy on dips” strategy for both metals.
Gold and silver hit record highs
Gold prices recently broke the $3,000 per ounce level, marking an all-time high. In India, silver breached the ₹1 lakh mark per kilogram, witnessing over 3% gains last week.
The rally was supported by a weaker dollar index, softer US inflation data, and concerns about global economic growth.
The dollar index posted its largest weekly drop since the pandemic, pressured by the German fiscal stimulus package, which boosted the euro. A weaker dollar typically supports higher gold prices as investors seek safety.
Trade tensions add to market volatility
Fresh tariff threats from the US against European alcoholic beverages have added uncertainty to the markets.
In response to the European Union’s 50% levy on American whiskey, the US threatened to impose tariffs of up to 200% on European wines and champagnes.
These trade tensions have fueled investor demand for safe-haven assets like gold and silver.
Fed’s rate stance and inflation concerns
US inflation fell more than expected to 2.8% in February, raising expectations of a potential rate cut by the Federal Reserve. Slower-than-expected job growth further reinforced this sentiment.
The US added 151,000 jobs in February, missing the expected 160,000, while January’s job growth was revised downward.
Fed Chairman Jerome Powell has signaled caution, stating that the central bank is not in a hurry to cut rates and will closely monitor inflation and economic trends.
The Fed is expected to keep rates steady at 4.25%-4.5% in its upcoming meeting.
China’s gold demand remains strong
China’s gold market saw record inflows into ETFs.
As the Chinese economy recovers, jewelry demand is expected to remain robust, further supporting gold prices.
How to invest in gold and silver
Motilal Oswal recommends a “buy on dips” strategy for gold and silver, citing ongoing global risks and economic uncertainty.
While some consolidation may occur after the recent surge, the overall bias remains positive for both metals.
Investors can consider options such as gold ETFs and silver ETFs to gain exposure to the precious metals market.