Motilal Oswal’s Navneet Damani flags froth in gold & silver, sees scope for healthy corrections in 2026

Expert view: After the sharp rise in 2026 and the volatility this year, investors are contemplating how to approach gold and silver going ahead. Navneet Damani, Head of Research, Commodities, Motilal Oswal Financial Services, believes that 2026 will not see a one-way rally in gold and silver prices. That said, he remains bullish on these commodities. He believes that investors should focus on allocating 15% to precious metals, with a higher chunk allocated to gold. Damani also highlighted the factors that could trigger a reversal in the bull trend in the precious metals. Edited excerpts:

Gold and silver have been the hottest assets of the year. Do you still have a bullish outlook, and what are your bull-case targets for them?

We have been very positive on gold and silver for the last 1-2 years, and what we've seen in 2025 is nothing short of exuberance. Silver seems a little ahead of the course, and the 200% rally in two years is creating a lot of FOMO buying.
There is a buzz that a large participant or institution was shot in the market, and now that they have been cornered, this is why we saw silver jump from $70 to $80. But overall, in the larger macro framework, it looks like there is going to be substitution.

There will be a realignment of funds in commodities in the first quarter of 2026, which could probably pause the run-up or the speed of gold and silver rise in today’s market.

That said, we believe that the larger trend remains positive and $90 or $95 is pretty much on cards for silver, translating to around ₹3,23,000-3,30,000 on the domestic front. As for gold, $4750, followed by $5000, could be a level to watch out for in 2026. For MCX, ₹1,21,500 or 1,55,000 could be the upside potential target for gold.

However, it's not going to be a one-way smooth ride that we had in 2025. This year is going to be bumpy, marked by sharp selloffs and reasonable pullbacks along the way. Massive volatility is expected in the first, at least in the first quarter of 2026.

Do you think silver and gold prices are showing signs of exuberance?

Yeah, it's a little exuberance at this point in time, and we would need more fundamental factors to justify any major further movement from hereon. The market being in a deficit or various uses of silver in segments like solar panels, EV, and all is one part of the story, but that will eventually not help you justify the 180% or 170% move that has happened in 2025.

Would you still recommend a 10-15% allocation to commodities in a portfolio, or should one consider increasing it?

Well, fundamentally and practically, 15% is the number. You have to understand that 2025 was an outlier year. From 2011 to 2019, silver did not do anything at all. It kept on hovering between ₹30,000-40,000. It underperformed for a good 7-8 years. And this is quite common in commodities, where they go into a lull period after a brief rally for months, quarters and years. So, having a balanced portfolio and 15% allocation into precious metals, another 10% into international commodities like base metals or some of the soft commodities, is enough for those looking at diversification. But investors must note that gold should be the major chunk, with some allocation to silver. In the 15% allocated to precious metals, 10% could be gold and 5% could be silver.

Which factors could trigger a reversal in gold prices?

For this to happen, a lot of measures that have been taken from US President Donald Trump’s side will have to be reversed, which we don't think will happen in 2026 or maybe in the next one year or so.

His impeachment could be one big factor which could again trigger some volatility in the market, leading to positivity in gold prices. But eventually, a big fear factor could be if central banks start to shift away from de-dollarisation and start accumulating U.S. Treasury because of better yields

Many countries are buying gold at every level—from central banks to funds to ETFs. If they decide they can lend this gold, or if banks or governments allow their holdings to be lent to end users, that could mark a major reform. The current shortage in the market—gold sitting in vaults and warehouses—could then come into the open market.

For lending purposes, this could reduce the pressure from actual demand, which is very high in India, China, and some other parts of the world. That demand could immediately take a backseat, potentially bringing prices significantly lower.

If someone wants to play the metals, what could be the ideal bet — ETFs, physical commodity or via equity-linked plays?

We have seen in the case of gold and silver that jewellery stocks have not really participated. One can look at these stocks linked to commodities as a hedge to a very large extent, and that is the bigger reason that they don't benefit from the massive run-up or rallies in prices. In fact, they have a major mark-to-marketing loss. According to me, that’s not the best way to participate.

To play the rally in gold or silver or any momentum that you see in metals, the safest or good way is to look at an ETF as an investment. It has a 95-97% correlation to underlying prices and saves on GST or storage costs.

ETFs or SIP in some of these funds or funds could be a good opportunity. The government had introduced gold bonds a few years back, which was a very good initiative, and the scheme has given bumper returns to clients, and all gains were tax-free. Some sovereign gold bonds do get traded in the secondary market. If an investor wants to take a tactical pay for the next 3-4 years, that can be an opportunity where a sovereign gold bond in the secondary market can be considered. Buying jewellery would be the last preference, and bars or coins are suitable if you want to hold it for a longer term, and do not want to pay the fund manager. If you want to wear it, then only venture into buying jewellery.

How do you see the crude story playing out in 2025 amid the US-Venezuela developments?

Ever since OPEC and non-OPEC countries have been increasing production, there has been a supply glut in the market, which has led to a sharp decline in oil prices as the demand has not been as sharp.

This year started with geopolitical tensions. Venezuela, let’s be clear, has reasonable reserves, and those reserves are not in the market as yet. And their production from 2015, which was 4% of global production, is now down to 0.8-0.9% of global production. With the US stepping in, early plans signal that they will bring back the lost glory to Venezuela and lost production also. Eventually, over the next 1-2 years, if the production reaches 3-4% of the global production, then it will keep the market well liquidated and well supplied.

With OPEC+ continuing to pump in and the demand side scenario not looking very robust, it looks like this year, at least, the first two quarters will be negative for crude oil prices.

We see crude oil prices sliding to $45 and $47 for WTI. On the domestic front, it could be as low as ₹4500-4700, also on the MCX.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.