Holiday volatility, margin hikes trigger profit booking in metals; 2026 seen as a year of consolidation

Sharp volatility in precious metals is being driven more by technical factors and seasonal thin trading than by any major deterioration in fundamentals, according to Ajay Kedia, Founder & Director, Kedia Commodities.

Speaking on Commodity Central with ET Now, Kedia said the recent 10% correction in silver—followed by a quick 4.5% rebound—reflects overdue profit booking after a “marvellous rally” in 2025.

Low volumes, margin hikes add to metal volatility

Kedia pointed out that trading volumes remain muted due to the holiday period and are likely to stay thin until early January.

“CME margin hikes on both gold and silver triggered profit booking. Markets were severely overbought, so some correction was inevitable,” he said.

He added that concerns around global growth, including commentary from industry leaders and China’s review of export policies for 2026, also weighed on sentiment.

Historically, similar corrections have played out before. “In October, silver fell nearly 18% and gold corrected about 13%. This kind of volatility is not new when markets are overheated,” Kedia noted.

Gold, silver outlook: Corrections likely, upside intact

While Kedia does not expect a repeat of 2025’s sharp rally in 2026, he believes upside remains over a longer horizon.

Gold (International):

Near-term support is seen around $3,800, while upside could extend to $4,850 over time if rate cuts continue and macro risks re-emerge.

Silver (International):

After reaching the long-term target of $75–80 much earlier than expected, silver may correct towards $60, before attempting a gradual move towards $85–90.

“Silver has achieved multi-year targets in a single year. Now the market needs time to digest gains,” he said.

Crude oil: Oversupply caps upside

Turning to energy markets, Kedia said Brent crude’s nearly 18–20% decline reflects a well-supplied market.

“OPEC+ actions are already discounted. US production remains high and demand has lagged,” he said.

For the first quarter of 2026, he expects crude oil to trade in a narrow range of $58–66 per barrel, barring any major geopolitical shocks involving regions such as Russia-Ukraine, China-Taiwan or Venezuela.

Base metals poised for 2026 rally

Kedia believes base metals have lagged precious metals and could attract fresh fund flows as rate cuts support consumption.

Copper: Target of $13,500 internationally in 2026; around ₹1,400 on the domestic market

Zinc: Seen near $3,500 globally and ₹340 domestically

Aluminium: Domestic prices could move towards ₹320

“Consumption-driven demand from infrastructure and manufacturing has not yet fully played out. Base metals still have room to run,” he said.

Steel outlook: Cautious optimism

On ferrous metals, Kedia said domestic steel prices have recently moved towards ₹41,000 per tonne, but high inventories and ample supply may limit sharp upside.

“Steel could move towards ₹45,000, but we don’t expect the kind of fireworks seen in silver or copper,” he said.

Market view

Kedia summed up the outlook by advising caution in the near term but optimism over the medium horizon.

“2026 will be a year of consolidation rather than runaway rallies. Corrections should be viewed as healthy, especially in precious metals, while base metals could gradually take the lead,” he said.