Gold’s glittering rally is expected to continue, with prices likely to climb towards $4,500 per ounce in overseas markets, supported by sustained global central bank purchases, persistent geopolitical tensions, and strong Asian demand, according to a report by Motilal Oswal Financial Services Ltd.
Silver, which has outperformed gold in terms of returns so far this year, is projected to climb to around $75 per ounce, aided by robust industrial consumption and a widening supply deficit, the report said.
Gold prices have surged over 50 per cent in 2025, breaching the $4,000 per ounce level and marking more than 35 record highs this year.
The yellow metal’s rally has been driven by a mix of global uncertainty, expectations of US Federal Reserve rate cuts later this year, and sustained central bank accumulation, it added.
“Gold’s stellar rally reflects a confluence of macro shifts, from fiscal uncertainty and a softer dollar to strategic diversification by central banks. Asia is emerging as the epicentre of this new monetary alignment,” Manav Modi, Analyst, Commodities & Currencies, Motilal Oswal Financial Services Ltd (MOFSL), said.
In India, gold prices touched ₹1.20 lakh per 10 grams last week and could move towards ₹1.35 lakh in the long term, assuming a USD-INR rate of 89.
Silver, which has gained over 60 per cent year-to-date, is expected to rise to ₹2.3 lakh per kilogram in the domestic market, the report noted.
The rally has been underpinned by a weak US dollar index below 100 and a relatively firm rupee, coupled with China’s growing role as a global gold custodian. Central banks purchased nearly 600 tonnes of gold in the first nine months of 2025, while global gold exchange-traded funds recorded inflows of 450 tonnes, the strongest since 2020, the report said.
“Central bank diversification is redefining the bullion market. For the first time, institutional demand and sovereign accumulation are aligned with long-term value creation,” Navneet Damani, Head of Research, Commodities & Currencies, Motilal Oswal Financial Services Ltd, said.
MOFSL pointed out that persistent US fiscal concerns have lifted demand for safe-haven assets, while softening labour data has strengthened expectations of imminent rate cuts by the Federal Reserve.
On the supply side, stagnant global mine output, declining ore grades, and tighter environmental norms have constrained availability.
India, one of the world’s largest consumers, imported around 300 tonnes of gold and 3,000 tonnes of silver by the third quarter of 2025, reflecting resilient demand despite elevated prices. The steady appetite was attributed to cultural preferences, rising disposable incomes, and the metal’s role as a traditional store of value, MOFSL said.
Meanwhile, silver’s surge has been driven not just by investor demand but also by industrial use in solar energy, electric vehicles and AI hardware, leading to a persistent market deficit. The gold-silver ratio has narrowed to around 81-82 from 110 earlier this year, signalling silver’s relative strength.
“Global silver supply has failed to keep pace with demand for several years, resulting in a structural deficit that is expected to persist for a fifth straight year in 2025,” the report said, adding that this acute shortage has disrupted the parity as well as premiums in the market, creating some unique opportunities and also supporting the overall sentiment.
As Diwali approaches, MOFSL expects India’s gold demand to remain robust.
Historically, domestic gold prices have risen in seven of the past ten Diwali seasons, with pre-festival gains often outpacing post-Diwali trends.
“Despite record-high prices, domestic demand remains resilient, supported by cultural sentiment and investor optimism,” the brokerage added.
On the market outlook, Motilal Oswal Financial Services maintained a constructive outlook for both precious metals. It said short-term corrections cannot be ruled out following the steep rally, the underlying fundamentals remain strong.
Manav Modi and Navneet Damani said gold has met their earlier targets of $4,000 per ounce mark on Comex and ₹1,20,000 per 10 grams level on the domestic front.
“While bouts of correction may emerge, persistence above the all-time highs could take prices towards $4,500 per ounce on COMEX and, assuming USD/INR at 89, ₹1,35,000 per 10 grams on the domestic front from a long-term perspective,” they added.
According to the brokerage, the ongoing rally marks more than just another cyclical upturn. With Asia leading the charge in demand and central banks continuing to accumulate reserves, gold appears to be reclaiming its position as a key reserve asset in a shifting global financial landscape.
Published on October 17, 2025
