Gold and silver outlook: Precious metals likely to stay strong; Kotak AMC Nilesh Shah cites central bank demand and dollar weakness

Gold and silver are expected to maintain strong momentum in the coming months, driven by robust central bank demand, shifts in US monetary policy, and supply constraints, according to Nilesh Shah, Managing Director of Kotak Asset Management Company (AMC).Shah highlighted that central bank purchases, both in gold and potentially silver, remain a key driver for these commodities, according to an ET report. “The prices of these commodities cannot be evaluated on a fundamental basis like equity shares because there is no cash flow, there is no dividend, and there is no bonus. You have to evaluate based on perceived value. And as long as central banks continue to buy gold, prices can go higher,” he said.He further noted that macro factors such as a weakening dollar and lower US interest rates are likely to lend additional support. “Undoubtedly, when the dollar weakens and interest rates come down in dollars, commodity prices get supported. Lower Fed interest rates will be positive for precious metals. Weakening of the dollar will also be positive for precious metals. More importantly, as long as the US policy remains unpredictable, like they froze Russian FX reserves post-Russia-Ukraine war, certainly that kind of unpredictability is pushing central banks to diversify into precious metals,” Shah explained, quoted ET.On portfolio strategy, Shah underlined the importance of gold and silver for long-term diversification, though he cautioned against setting rigid price targets given geopolitical and central bank dynamics. “Now every month we are watching what the industrial demand in silver is, what is the demand-supply equation, what is the central bank buying. As long as these factors are favourable, we will continue to remain bullish on gold and silver,” he said.Shah also addressed Kotak AMC’s temporary suspension of fresh inflows into its Silver Fund of Fund, attributing the move to premium valuations and festival-related supply constraints. He clarified that the underlying Kotak Silver ETF remains active and continues to trade on exchanges. “Our Kotak Silver ETF, being a listed security, does not have suspension or temporary suspension, so it continues to trade on exchanges. Kotak Silver ETF Fund of Fund, which goes and invests into that ETF that we have suspended only for lump sum purchase,” he said, according to an ET report.Shah said that sustained central bank purchases, potential dollar weakness, and supply-driven premiums are likely to keep gold and silver attractive for investors seeking strategic hedges and long-term portfolio diversification in uncertain markets.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)