In an exclusive interaction with Finance Outlook India, Manav Modi, a seasoned Commodities Fundamental Analyst at Motilal Oswal Financial Services Ltd., shared comprehensive insights on navigating the evolving dynamics of precious metals markets. With over five years of experience advising market participants on price outlooks and trading opportunities across precious and non-ferrous metals, Manav highlighted the transformative interplay between India's festive demand surge and global macroeconomic cues in driving bullion prices.
He emphasized the critical importance of understanding supply-demand dislocations, particularly in silver, the impact of Fed rate-cut expectations, central bank buying patterns, and geopolitical tensions that continue to elevate safe-haven demand. A regular contributor to leading publications, Manav envisions India's festive and wedding season as a significant sentiment booster that, while amplifying short-term price movements, operates within a broader framework of global anchors like dollar stability, crude volatility, and structural industrial demand—especially from solar and electronics sectors—that positions precious metals for sustained momentum in the coming quarters.
With India entering its peak festive and wedding season, how significant is domestic retail demand vs global cues?
India’s festive and wedding season has always provides a boost in sentiment on domestic front. Normally, macro and global cues dominate price direction however, this year domestic dynamics are also on the forefront. With over 60% rally in gold and silver and visible supply-demand dislocation, especially in silver, domestic factors and volaitlty also influence the price sentiment. While festive and wedding demand adds momentum, broader tailwinds like rate-cut expectations, central bank buying, ETF inflows, and ongoing geopolitical and tariff related tensions remain the primary global anchors.
How are recent Fed moves and the dollar index influencing bullion, and can India’s festive demand offset global headwinds?
The Fed has announced a 25-basis cut in September, with two more expected in October and December, though 2026 is projected for only one cut. Markets, however, are pricing in potential additional easing next year amid mixed US growth and inflation data. The dollar index has remained stable, hovering below 100, and US yields are steady around 4%, increasing concerns for market. Domestically, USD-INR volatility can influence bullion prices, and festive demand provides some support in market sentiment. However, macro and global factors retain higher weight, meaning local demand may amplify short-term moves but cannot fully offset broader headwinds.
Also Read: US Federal Reserve Cuts Rates by 25 bps: Key Highlights
How are geopolitical tensions and crude price swings shaping safe-haven demand for gold and silver during the festive quarter?
Geopolitical tensions and crude price swings continue to support safe-haven demand for gold and silver. Crude has largely traded in a broad range this year, though recent supply concerns have added some momentum and volatility. Meanwhile, conflicts like Russia-Ukraine and Israel-Hamas, along with US spending and borrowing issues, central bank demand and US-China tariff tensions, are elevating risk premiums.
Can industrial demand from solar and electronics, combined with festive buying, sustain silver’s price momentum amid ongoing global supply deficits?
Silver plays a dual role, straddling both industrial and precious metal demand. Currently, over 55–59% of production is consumed by industrial uses, making it more sensitive to supply-demand shifts and increasing volatility. Strong uptake in solar and electronics has tightened global supply, creating influencing parities and premiums in Silver market. This is the fifth consecutive year of a global silver deficit, now compounded by domestic demand surges. The combination of structural scarcity, industrial demand, and seasonal buying suggests near-term price momentum is likely to remain elevated, with sharper premiums.
