Spot Gold prices in the US market is all set to touch $3,000 an ounce and ₹85,000 per 10 grams supported by safe haven demand amid heightened geopolitical tensions and fear over potential trade war hurting economic growth.

Industrial metal silver will also register a strong rally touching ₹1.10 lakh per kg on short supply and robust demand.

The uptrend in gold will also be supported major central banks buying as they diversify reserves amid easing monetary policy with inflations touching near their set target.

Gold prices have rallied sharply last year to hit an all time high of $2,790 an ounce as US Federal Reserve reduced rates by one per cent. Additionally, prices remained firm due to central bank buying,

uncertainty surrounding US Presidential election and escalating geopolitical tensions

Global central banks have purchased 186 tonnes of gold in September quarter of 2024. Though it was lesser then the same quarter last year, it still

looks healthy given the buying spree in last few quarters.

Central banks have purchased 694 tonnes of gold till September quarter last year and this was in line with same period of 2022. Looking at the current situation, the central bank will continue to add gold to diversify their reserves for financial or strategic reasons, said ICICI Securities.

China’s central bank broke the silence and re-entered the market after six month pause and purchased 5 tonnes of gold in November taking reserves to 2,269 tonnes. China remained one of the top gold buyer of 2024 with 34 tonnes. Looking at the current scenario People’s Bank Of China is likely to continue to add gold to its reserves as it has low co-relation to other forex assets.

Firm silver demand

Silver prices will also gain strength as supply may remain in deficit for fourth consecutive year. Supply deficit was at about 182 million ounces in 2024.

Demand in the industrial sector is likely to grow amid green economy applications particularly photovoltaics, electrification of vehicles, investments in infrastructure, such as charging stations, power grids and rapid adoption of AI technologies.

Moreover, investment demand may surge amid rate cut across major economies, hopes for more stimulus packages from China and elevated geopolitical tensions. Spot Silver may rise further to $37-$38 level in coming months.

Demand for silver in industrial segment is expected to grow by 7 per cent this year surpassing 700 million ounces for the first time on strong demand from green economy applications.