Anindya Banerjee, Senior VP at Kotak Securities, said that overall outlook continues to be bullish on the precious metals for next year.
He said that the central banks are diversifying their reserves and this ultimately has supported the rally in gold. This, he said, will likely continue in 2026 as "we are going through an advanced stage of de-dollarization".
According to Banerjee, Gold can climb to USD 5,200 next year and even go higher with central banks doubling down on diversification.
"The diversification demand comes from central banks seeking to reduce their dependence on the US dollar. Also, financial institutions are looking to diversify... This demand is expected to keep rising as the global economy moves into an advanced phase of de-dollarisation. As a result, central banks are increasingly accumulating gold by selling a portion of their fiat currency holdings," he said.
"Institutions, especially in the west, who are largely underinvested into gold, will see a rise in allocation from their end," he said.
He said that there is a strong speculative demand in silver but in gold that is missing because the yellow metal is going through a time and price correction.
"This is a good thing for the long-term, next 12 months. We expect that from this launch pad, gold prices will rise because if you look at the US economy, it looks like a K-shaped economy where the consumer is sinking and sinking hard. It is the AI, data center themes and the investments around that are holding up the stock market and the GDP," he said.
He said that Donald Trump is facing an election risk next November and he "very well knows that he has to spend a lot in the economy and that has to be backed by the Federal Reserve."
"It only means that in spite of the high inflation in America, the Fed has to ignore that. The Fed has already committed to buy USD 40 billion per month in short-term treasury bills and notes. I think we could see the Fed cutting rates aggressively," he said.
He further said that the dollar debasement trade will increase "which is a very positive sign for gold and silver".
Gold can scale levels of USD 5,200, Banerjee said, adding that "the yellow metal can even go higher because the currency debasement tradecan actually increase a lot".
In the international markets, gold on Wednesday surged past USD 4,500 per ounce for the first time. The yellow metal hit a high of USD 4,527.
So far this year, gold has soared 70 per cent, putting it on course for its strongest annual gain since 1979.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
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