By Mitesh Kumar, CMT

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The Paradigm Shift in Asset Allocation

The last 15 months have presented a stark divergence in the Indian financial landscape. While the Nifty 50 has entered a period of protracted consolidation, a secular bull market has ignited in commodities. This “stealth rally” has fundamentally altered the risk-reward profile for diversified portfolios.

The Inter-market Dynamics: INR/USD & Precious Metal

The spectacular returns in Gold and Silver throughout 2025—up 83% and 180% respectively—cannot be viewed in isolation. We are witnessing a perfect storm of soaring global spot prices compounded by a deteriorating INR/USD exchange rate.

Technically, the domestic price action has benefited from a “positive correlation” move: as global uncertainty drives the Dollar Index (DXY) and Gold simultaneously, the local INR price undergoes an exponential markup.

Broad-Based Strength Across Base Metals – a study in charts

The rally is no longer confined to “safe-haven” assets. A multi-sector analysis reveals robust technical setups across the Base Metals complexes:

• Precious Metals: Gold’s reclaim of the $4,500 handle and Silver’s rise above $80 again this week suggest deep institutional accumulation and a lack of overhead supply.
• Base Metals: Copper, Nickel, and Aluminum exhibit “higher-high” and “higher-low” structures on weekly timeframes.
• Energy/Specialty: Uranium (USD) and Platinum (USD) continues their parabolic trajectory, supported by long-term structural deficits.

Despite a brief spell of mean reversion last week, the swift absorption of selling pressure confirms that the primary trend remains aggressively bullish.

Strategy: Navigating the “Vertical” Phase

In technical terms, the path of least resistance is currently North. When an asset class enters a vertical blow-off or a strong trending phase, “valuation” becomes a secondary metric to “momentum.”

Technical Insight: Markets in a parabolic phase often stay overbought longer than bears can stay solvent. The “multi-billion dollar question” of timing the top is best answered by staying in the trend.

Execution Parameters:

• Trend Following: Utilize a disciplined methodology trend following methodology to define your exit.
• Price vs. Time Corrections: Be prepared for sharp, high-velocity pullbacks. These are often “shakeouts” rather than trend reversals.
• Avoid Counter-Trend Trading: Attempting to short a bull market cycle is a path to wealth destruction.

Conclusion

The data suggests that we are in the midst of a large commodity cycle. Until the price action prints a clear “lower low” on the daily and weekly charts, the most prudent technical stance is to stay aligned with the prevailing momentum.

There will be a time in the future when you can move the prices and create the chart, until that time, lets follow what the charts are telling us.

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