Speaking to ET Now, Kedia said nearly $6.8–$7.1 billion worth of gold and silver futures could see selling pressure as index allocations are brought back in line after an exceptional rally in 2025.
“Gold delivered close to 80% returns and silver nearly 180% last year. Such outsized gains were bound to trigger index rebalancing. Gold’s allocation may fall from around 20.4% to nearly 15%, implying close to $7 billion of outflows. A similar adjustment is expected in silver,” he said.
Bullion fundamentals intact, but correction likely
Despite the expected selling, Kedia remains structurally bullish on precious metals, citing persistent supply-demand imbalances. He pointed out that silver supply remains near 1,000 million ounces, while investment demand over the last three years alone has exceeded 200 million ounces, resulting in a sustained deficit.
“Fundamentally, bullion remains strong, but after such sharp rallies, a price or time correction is inevitable. We do not expect a crash, but a 20–22% correction in gold is possible after an 80% rise,” he said.
Kedia added that several bullish triggers—such as central bank buying, de-dollarisation themes and a weaker dollar—have already been priced in. The rebound in the US dollar index and shifting expectations around US Federal Reserve rate cuts could also contribute to profit booking.
Gold, silver levels to watch
In the near term, Kedia advised caution on fresh long positions in bullion ahead of key macro triggers, including US jobs data, tariff-related developments and interest-rate expectations.“We are not recommending aggressive longs at current levels. Gold could see a pullback towards $4,380 internationally, while silver may find support near $72,” he said.
For Indian investors, Kedia expects silver to correct by 25–28% from recent highs, potentially settling near ₹160–170 on domestic markets. However, rupee weakness could limit the full transmission of global price declines locally.
“Instead of chasing prices, investors should consider a SIP approach in silver ETFs or multi-asset funds over the next six months,” he advised.
Industrial metals seen entering next phase of cycle
Kedia believes the commodity cycle is now shifting from precious metals to industrial metals, supported by falling interest rates, moderating inflation and expectations of a recovery in global growth.
“Historically, the cycle moves from energy to precious metals and then to base metals. Conditions are now aligning for industrial metals to perform,” he said.
On copper, Kedia expects near-term consolidation around 11,500–12,000 levels due to demand moderation ahead of the Chinese Lunar New Year, but remains bullish over the medium term.
“Supply shortages and lack of fresh capex could push copper towards 14,500–15,000 on the LME in 2026,” he said.
Overall, Kedia said his preference for the coming year lies with base metals such as copper, zinc and aluminium rather than bullion, as global institutions rotate towards pro-growth assets amid easing monetary conditions.