Gold slips on profit booking, silver extends record rally on supply stress

Global gold and silver prices moved in opposite directions, as profit booking weighed on gold while silver extended its sharp rally amid tightening physical supplies and structural market stress.

Gold prices eased during Asian trade, with spot gold falling 0.4% to $4,535.50 per troy ounce. The decline followed recent volatility after prices failed to sustain levels above key resistance zones.

Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said gold weakened as traders booked profits after the recent rally.

According to him, gold remains volatile as markets reassess positions, with the US Federal Reserve’s meeting minutes emerging as a key near-term trigger. He added that thin volumes during the US holiday period could keep price swings elevated, with gold expected to trade in the ₹1.35 lakh–₹1.42 lakh range in the near term.

Despite the latest pullback, gold prices have risen over the year as investors sought safe-haven assets amid geopolitical tensions, concerns around US fiscal stability, and expectations of further interest rate cuts by the Federal Reserve, which have pressured the US dollar.

In contrast, silver prices continued to outperform.

Spot silver gained 3% to $79.87 per ounce, building on a year that has seen prices surge to all-time high levels. Silver crossed $75 on COMEX during 2025 and rose above ₹2.3 lakh in the domestic market, marking gains of more than 160% for the year.

According to Motilal Oswal Financial Services Ltd.’s Commodities Insight report, “Silver Unchained!!!”, silver’s rally reflects a structural shift rather than a conventional bull cycle. The report attributes the price surge to prolonged physical supply deficits, declining inventories, policy-led supply constraints, and sustained industrial and investment demand.

Navneet Damani, Head of Research – Commodities at Motilal Oswal Financial Services, said the silver market in 2025 moved into a structural phase driven by inventory depletion and physical scarcity. He pointed to a widening disconnect between paper pricing and physical availability, highlighting deeper stress in global price discovery mechanisms.

The report noted sustained drawdowns in silver inventories across major hubs, including COMEX and Shanghai, stressing a global shortage of deliverable metal rather than a regional imbalance. China’s role as a major refiner and net importer has also influenced the market, with physical inventories falling to decade-low levels during the year.

Proposed export licensing requirements from January 1, 2026 are expected to further restrict global supply.

Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, said persistent inventory declines and weakening arbitrage between Shanghai and COMEX have exposed limited availability of physical silver. He added that sustained premiums in physical markets reflect genuine supply tightness rather than temporary pricing inefficiencies.

While Motilal Oswal noted that its initial COMEX silver target of $75 has been achieved, it reiterated a target of $77, equivalent to ₹2.46 lakh per kg in the domestic market, subject to evolving market conditions.

-With Reuters inputs