Whalesbook
Central banks purchased 220 tonnes of gold in Q3 2025, a 28% increase from the previous quarter, according to the World Gold Council. While gold hit record highs and then pulled back, experts foresee a bullish long-term outlook for both gold and silver. Investors are advised to book profits on sharp rises and accumulate on dips, particularly through gold and silver ETFs, amidst global uncertainties and strong industrial demand.
Central banks have significantly increased their gold reserves, with a purchase of 220 tonnes in Q3 2025, marking a 28% rise from the prior quarter, as reported by the World Gold Council. Gold, often seen as a safe haven asset during economic uncertainties, has experienced notable price volatility. It recently touched a record high of Rs 1,32,294 per 10 grams, but has since seen a decrease of approximately 6.88 percent, trading at Rs 1,23,180 on MCX.
Manav Modi, a Precious Metal Research and Analyst at Motilal Oswal Financial Services Ltd., noted that the recent 60-70 percent rally this year warrants some profit booking. The long-term outlook for gold remains bullish, supported by economic data, potential liquidity infusion, continued central bank accumulation, steady ETF inflows, and broader global uncertainties. Modi suggests a strategy of booking profits on sharp increases and accumulating on dips.
The US Federal Reserve's interest rate cuts (to 3.75–4 percent) have also influenced market sentiment. While initial beliefs suggested political pressure, Fed Chair Powell indicated that inflation risks persist. The market anticipates the Fed is unlikely to enter a full easing cycle unless labor markets weaken, leading to a sharp fall in the probability of a December rate cut. This uncertainty has capped the near-term upside for gold and silver, though any dovish shift or confirmed rate cut could re-energize the rally.
Gold is currently exhibiting unusually large daily price swings due to higher implied volatility, urging investors to adopt a cautious, staggered investment approach. In the domestic market, with USD/INR near 90, a support range of Rs 1,18,000 to Rs 1,20,000 is identified, with potential upside targets of Rs 1,30,000 and Rs 1,37,000 over the next year if this base holds.
Central banks, including the Reserve Bank of India (RBI), continue to accumulate gold strategically. The RBI added nearly 600 kilos between April and September 2025, bringing its reserves to about 880 tonnes. This sustained accumulation highlights gold's role as a hedge against global uncertainties and provides an anchor for long-term price stability.
Silver has also outperformed gold, driven by its dual role as a safe-haven asset and its significant industrial applications. With accelerating adoption of EVs, solar manufacturing, and clean-energy technologies, industrial consumption is poised for further growth. While global supply tightness is a structural issue, eased immediate shortages and consistent demand from both industrial and investment channels suggest silver's upward momentum may continue.
Gold and silver ETFs in India have witnessed substantial growth, with Assets Under Management (AUM) nearing Rs 1 lakh crore for gold ETFs and Rs 35,000 crore for silver ETFs. These ETFs offer a transparent, liquid, and cost-effective investment avenue. For investors with a horizon of one year or more, allocating to gold or silver ETFs is recommended as a prudent diversification strategy.
Impact
This news has a significant impact on the Indian stock market and investors, providing insights into commodity price trends, central bank strategies, and investment recommendations for precious metals and related ETFs. The analysis directly influences financial planning and portfolio diversification decisions for Indian investors. Rating: 8/10.
Difficult Terms:
Bullion: Refined precious metals, primarily gold and silver, in bar or ingot form.
Safe Haven: An investment that is expected to retain or increase its value during times of market turbulence or economic uncertainty.
ETFs (Exchange Traded Funds): Investment funds traded on stock exchanges, much like stocks. They typically track an underlying asset, index, or commodity.
AUM (Assets Under Management): The total market value of assets a fund manages.
USD/INR: The exchange rate between the US Dollar and the Indian Rupee.
Dovish Shift: A monetary policy stance that favors lower interest rates and easier credit conditions.
Implied Volatility (IVs): A measure of the expected volatility of an asset's price, derived from options prices.
MCX: Multi Commodity Exchange of India, a commodity derivatives exchange.
