Bull run for gold and silver likely to continue on central bank demand and weaker dollar: Kotak AMC’s Nilesh Shah

Precious metals are likely to continue to see support in the coming months, driven by strong central bank demand, shifts in US monetary policy and supply constraints, said Nilesh Shah, managing director of Kotak AMC.

“…for precious metals, there is central bank demand for gold and industrial equipment, plus potential central bank demand for silver. The prices of these commodities cannot be assessed on a fundamental basis like equity shares, because there is no cash flow, no dividend and no bonus. You have to evaluate based on perceived value. And as long as central banks keep buying gold, prices can rise,” Shah said.

The Kotak AMC MD noted that factors such as a weakening dollar and lower US interest rates will further support precious metals prices. “Undoubtedly, commodity prices will be supported as the dollar weakens and dollar yields fall. Lower Fed rates will be positive for precious metals. A weakening of the dollar will also be positive for precious metals. More importantly, as long as US policy remains unpredictable, just as they froze Russia’s currency reserves in the post-Russia-Ukraine war, this kind of unpredictability will certainly push central banks to diversify into other markets.” precious metals.”

Shah emphasized that while exact price targets are difficult due to geopolitical and central bank actions, gold and silver remain crucial for portfolio diversification.

“Now every month we look at industrial demand for silver, at the supply-demand ratio and at what the central bank is buying. As long as these factors are favorable, we will remain bullish on gold and silver,” he said.

He also addressed the temporary suspension of fresh inflows into the Silver Fund of Fund by Kotak AMC, citing premium valuations and festival-induced supply constraints, while clarifying that the underlying Kotak Silver ETF will continue to trade on exchanges. in that ETF that we suspended only for the lump sum purchase,” he said. Going forward, with continued central bank buying, a potentially weaker dollar and supply-driven premiums, gold and silver are likely to remain attractive to investors seeking strategic hedges and long-term diversification in volatile markets.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)