Gold crosses ₹1,22,000 and silver touches ₹1,50,000; what next?

Gold prices have increased for the eighth straight week, rising 3% weekly and 52% annually, driven by worries about the global economy, ongoing geopolitical uncertainty, and increasing expectations of further interest rate cuts by the U.S.

The upward trend continued despite U.S. President Donald Trump once again reversing his stance on tariffs against China. However, it's still unclear whether the planned tariffs set for November 1 will go ahead.

Darshan Desai, CEO of Aspect Bullion & Refinery, said, “Markets dislike uncertainty, and as long as this lack of clarity remains, investors are likely to seek safe-haven assets like gold. Ongoing demand for gold is being driven not just by trade tensions but also by broader uncertainties, including concerns about the U.S. dollar and tariff-related issues."

Last week, spot gold jumped beyond the $4,000 psychological barrier, driven by heightened tensions between Washington and Beijing after Trump said there was no reason to meet with China's Xi Jinping in South Korea as scheduled in two weeks and that he was ready to raise duties on Chinese imports by 100%.

With a record high of $50 and its eighth consecutive weekly gain, silver prices have risen around 75% this year due to strong demand for safe-haven assets and ongoing supply bottlenecks.

Frequent backwardation, where spot prices exceed futures, along with prolonged physical shortages and dwindling inventory, are signs of stress in the global silver market. Such tight conditions have historically led to higher spot prices, as seen in the 2010–11 rally when silver reached $50/oz.

Renisha Chainani, head–research, said, “That incident is mirrored in the 2025 setup: high industrial demand, particularly from solar, multi-year supply shortages, and tightening visible stocks. However, geopolitical risks and global monetary easing are also driving the current rise, unlike in 2011.”

Silver may stay high if deficits persist, but there is still significant volatility risk. Demand has also grown because of political unpredictability, including the U.S. government shutdown, upheaval in France, and leadership changes in Japan. Prices face additional pressure to increase due to a lack of easily accessible silver in the London market.

Safe-haven purchasing in precious metal packs should preferably be put on hold as Israel's government confirmed a ceasefire with Hamas on Friday, moving the conflict in Gaza to a 24-hour standstill.

This year’s gold rally reflects increasing mistrust in the current monetary and fiscal systems. “The U.S., the U.K., France, and Japan are the four largest economies with debt levels exceeding 100% of their respective GDPs, and their fiscal situations continue to worsen. The Swiss franc and the yen, two other traditional safe-haven assets, are also becoming less appealing,” said Chainani.

Geopolitical risks remain high, central banks continue purchasing, Trump's trade war persists, and ETF holdings continue to grow as the chance of further Fed rate cuts rises. Gold's surge currently features a FOMO (fear of missing out) aspect. However, the foundations that have driven it so far are still very much in place.

Additionally, if the shutdown persists into this week, we will not receive the CPI release on Wednesday, increasing our uncertainty about the state of the American economy.

According to analysts, gold has reached all targets at $4,000 (around ₹120,000). As this rally continues, the next resistance is $4,150 (₹125,000). Caution is advised at this level. However, if gold futures stay below last Thursday’s low of $3,958 (₹120,000), it indicates that a short-term top has been formed, and a correction of at least 4-5% is likely.

“Silver has reached the target of $50 (around ₹1,50,000). If silver prices stay above this level, the next target is $55 (around ₹1,65,000). However, last week’s (Thursday) low of $46.70 (around ₹1,44,000) serves as a strong support. If silver futures fall below this level, we might see further correction or profit-taking of at least 4-5%,” said Chainani.