Following a sharp surge in 2026 and significant volatility this year, investors across India are evaluating their next move in the precious metals market. Navneet Damani, Head of Research for Commodities at Motilal Oswal Financial Services, offers a nuanced perspective. While he maintains a bullish long-term stance on gold and silver, he cautions that 2026 will not witness a smooth, one-way rally for these assets.
Bullish Targets Amid Expected Turbulence
Damani, who has held a positive view on gold and silver for the past 1-2 years, described the 2025 performance as "nothing short of exuberance." He noted that silver, with a 200% rally over two years, is seeing intense FOMO (Fear Of Missing Out) buying. While short-term factors like a large market participant being cornered may have spurred silver's jump from $70 to $80, a larger macro shift is underway.
He anticipates a realignment of funds within commodities in Q1 2026, which could temporarily pause or slow the current run-up. Despite this, the overarching trend remains positive. Damani's bull-case targets are substantial: $90 to $95 for silver, translating to approximately ₹3,23,000-₹3,30,000 domestically. For gold, he eyes $4750, followed by the $5000 level in 2026, with MCX potential targets at ₹1,21,500 or even ₹1,55,000.
"However, it's not going to be a one-way smooth ride that we had in 2025," Damani warned. "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."
Portfolio Strategy and Allocation Advice
Addressing the key question for retail investors, Damani reaffirmed a 15% allocation to commodities within a diversified portfolio. He emphasized that 2025 was an outlier year, reminding investors that silver underperformed for 7-8 years after 2011. Within the precious metals basket, he advises a heavier weighting towards gold.
"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 diversification," he stated. Of the 15% for precious metals, 10% could be in gold and 5% in silver.
What Could Reverse the Bull Trend?
Damani highlighted several factors that could trigger a reversal in gold's upward trajectory. A major one would be a reversal of measures taken by US President Donald Trump, which he sees as unlikely in 2026. Trump's impeachment could induce market volatility, potentially boosting gold.
The most significant fear factor, however, would be if central banks shift away from de-dollarisation and start accumulating U.S. Treasuries for better yields. Furthermore, if the gold held by central banks, funds, and ETFs is lent out to end-users, it could flood the market. "That demand could immediately take a backseat, potentially bringing prices significantly lower," Damani explained.
How to Invest: ETFs Over Jewellery Stocks
For investors seeking exposure, Damani clearly prefers Exchange Traded Funds (ETFs) over equity-linked plays like jewellery stocks, which have not participated in the rally and face mark-to-market losses. ETFs offer a 95-97% correlation to underlying prices and save on GST and storage costs.
He also recommended considering Sovereign Gold Bonds (SGBs), especially those traded in the secondary market, for a tactical 3-4 year play, noting their tax-free returns. Physical bars or coins are suitable for long-term holders who wish to avoid fund manager fees, while buying jewellery should be the last preference, reserved only for wearability.
Crude Oil Story: Bearish on Prices
Shifting to energy, Damani presented a bearish outlook for crude oil in 2026. A supply glut from OPEC+ and non-OPEC production increases, coupled with unspectacular demand, is pressuring prices. The potential revival of Venezuelan production with US involvement could further add to supply.
"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," he said. He sees WTI crude sliding to $45-$47, with domestic MCX prices potentially falling to ₹4500-₹4700.
Disclaimer: This analysis is for educational purposes only. The views are those of the analyst. Investors are advised to consult certified experts before making any investment decisions, as market conditions are subject to rapid change.
