Topic 3: BULLION: SHINING STREAK

Precious metals delivered a strong performance in August 2026, with both gold and silver witnessing sharp rallies and reaching fresh record levels before experiencing some profit-taking towards the end of the month. Domestic 24-carat gold started August at around ₹1,43,680 per 10 grams on August 3 and gained steadily during the month, crossing ₹1,48,000–₹1,49,000 in the first week before accelerating further. By August 24, gold reached a fresh record of around ₹1,64,730 per 10 grams, gaining nearly 15% from the beginning of the month. Internationally, Comex gold also touched a new high of around US$4,737 per ounce, highlighting the strength of the global bullion rally. The sharp rise was supported by a combination of expectations for a more accommodative US monetary-policy outlook, lower US yields, dollar weakness, geopolitical uncertainty and continued institutional demand. However, the pace of appreciation left gold vulnerable to profit-booking. By August 31, domestic gold had corrected to approximately ₹1,55,430 per 10 grams, nearly 5% below its August peak, although it remained substantially higher than its level at the beginning of the month.

Silver followed a similar upward trajectory but demonstrated greater resilience during the late-month correction. Domestic silver started August at around ₹2,184 per 10 grams, equivalent to approximately ₹218 per gram, and climbed to about ₹2,479 per 10 grams by August 24. Although it eased towards month-end, silver declined only modestly to approximately ₹2,423 per 10 grams, or ₹2,42,320 per kilogram, on August 31. This still represented a monthly gain of more than 11% based on the domestic prices cited. Internationally, Comex silver traded around US$67 per ounce towards the end of August. Silver's relative outperformance during the correction reflected its additional support from industrial demand and tight physical inventories. Demand from solar photovoltaic applications, electric vehicles, electronics and data-centre infrastructure remained an important structural driver, while investment demand provided further momentum.

Several factors contributed to the broad-based rally in precious metals. First, expectations of a softer US Federal Reserve policy stance and periods of weakness in the US dollar reduced the opportunity cost of holding non-yielding assets such as gold and silver. Expectations of lower real interest rates, reinforced by softer US economic and employment indicators, encouraged investors to increase exposure to bullion. US Treasury yields also declined at various points during the month, providing an additional tailwind. Second, investment flows improved materially. After a period of weakness and outflows, global gold exchange-traded products witnessed renewed buying, with significant inflows during early and mid-August, signalling a recovery in institutional investor sentiment. Indian gold ETFs also continued to attract investor interest, supporting domestic investment demand.

Central-bank purchases remained another important structural pillar of the precious-metals market. Countries including China, Poland, Uzbekistan and Kazakhstan continued to accumulate gold, reinforcing expectations that official-sector demand would remain strong. Such purchases provide a relatively stable source of demand and have helped strengthen the longer-term investment case for gold despite periodic corrections. Geopolitical tensions also supported safe-haven demand. Renewed concerns surrounding the Middle East, including tensions affecting regional shipping and energy supplies, encouraged investors to seek defensive assets. Rising crude-oil prices added to market uncertainty, although the impact of higher energy prices on bullion was mixed because persistent inflation could potentially delay monetary easing. Silver benefited from the monetary and safe-haven factors supporting gold while also adding momentum from its industrial fundamentals. Tight inventories, robust industrial consumption and expectations of continued demand from renewable energy, electric vehicles, electronics and technology infrastructure helped silver outperform during the rally.

Overall, August 2026 was a particularly strong month for bullion, driven by a combination of lower real yields, dollar movements, geopolitical uncertainty, central-bank accumulation and renewed investment flows. Silver additionally benefited from structural industrial demand and supply tightness, enabling it to demonstrate greater resilience during the late-month correction.