Commodities emerged as the best-performing asset class in India in 2025, surpassing equities, bonds, and other traditional assets. Precious metals, especially silver and gold, were the main drivers of this performance due to factors like policy uncertainty, currency fluctuations, strong institutional involvement, and ongoing supply limitations.
Silver prices in the domestic market soared by over 170%, while gold prices rose by more than 76%, outshining benchmarks such as the Nifty and the S&P 500. The preference for precious metals remained strong throughout the year, as indicated by rising gold-to-equity ratios even during risk-on periods.
Silver stood out as the top performer within precious metals, with the gold-silver ratio dropping significantly from about 110 to nearly 65. This shift highlighted a quicker price discovery process and a clear move towards silver leadership, according to the report.
The rally in precious metals was supported by structural supply constraints, with global silver demand surpassing supply for the fifth consecutive year. Additionally, the second-highest industrial demand on record, driven by various sectors like solar photovoltaics, electrification, electric vehicles, grid infrastructure, and emerging technologies, played a crucial role.
Analyst Manav Modi from Motilal Oswal Financial Services Ltd noted that the 2025 performance of precious metals reflects a notable change in investor behavior. Gold, in particular, has transitioned from a cyclical hedge to a strategic reserve asset, backed by continuous central-bank purchases, currency volatility, and persistent macroeconomic uncertainties.
Central banks’ annual gold purchases exceeding 1,000 tonnes further solidified gold’s position as a strategic portfolio hedge and accelerated the move towards de-dollarization. The report also highlighted that renewed ETF inflows, a weaker dollar index, and rupee depreciation boosted domestic gold returns in the latter part of the year.
