As the world bids good-bye to 2025, analysts are doing a detailed review of the assets that induced smiles in investors. It has been a year of precious metals, with gold and silver making the most noises.
Investor participation was unusually broad. Retail investors, institutions, hedge funds, and global central banks all increased their exposure to gold. New investors entered at multiple stages of the rally. Price corrections were limited throughout the year, according to a report by a business daily.
Gold and silver posted their best returns in over forty years. Silver surged about 138% this year, making it the top-performing major asset class. Gold climbed 74.5%, marking its strongest annual gain in decades. In comparison, the Nifty 50 returned around 9.4% as of 19 December 2025.
What supported gold prices
As is frequently seen, gold typically performs best during periods of crisis, high inflation, or sharp equity market declines. In 2025, however, gold remained strong even as equity markets stayed relatively stable. Inflation also remained manageable for most of the year.
The rally was driven by ongoing geopolitical tensions. Tariff and trade risks also played a role. Concerns around government borrowing and uncertainty over long-term interest rates supported prices. Experts point to strong central bank buying linked to geopolitical diversification and de-dollarisation. A sharp rebound in global ETF flows after years of outflows added further momentum.
Lower real yields and a softer US dollar helped sustain the rally. Renewed institutional interest kept gold resilient through the year. This held true despite stabilising growth and expectations of rate cuts.
At several points in 2025, gold and silver ETFs traded at premiums to their indicative net asset value. These premiums later eased as supply caught up. Such pricing reflected buying interest exceeding available supply.
Indian investors steadily increased their exposure to gold and silver ETFs. Many adopted a more strategic approach. Liquidity, transparency, and regulation made ETFs attractive as prices climbed. Gold ETFs recorded net inflows of Rs.31,315 crore between January and November 2025.
However, as prices rose, physical gold became less affordable. Digital gold emerged as an easy entry point for retail investors. Small online purchases, often worth only a few hundred rupees, appealed to first-time and younger buyers. Concerns around storage and purity were largely avoided.
This trend slowed sharply toward the end of the year. Regulatory scrutiny weighed on demand. NPCI data, the report highlighted, showed that digital gold purchases via UPI fell nearly 50% in November 2025. This reportedly coincided with a SEBI warning on risks linked to unregulated digital gold products.
It must be mentioned that jewellery demand struggled through the year. Persistently high prices reduced affordability. Volumes fell sharply despite strong investment demand. Experts note that jewellery consumption in India took a significant hit in 2025.
Silver driven by industrial demand
Silver delivered strong returns in 2025. Its rally, however, was driven by different factors. Experts say silver’s rise was not linked to market stress.
Demand from industry played a central role. Key sectors included electric vehicles, solar power, semiconductors, telecom, and artificial intelligence. Some large manufacturers secured long-term silver supplies directly from miners. This reduced reliance on spot markets.
These trends suggest silver demand may be turning structural rather than cyclical. This shift has also increased volatility. Silver rallied sharply during periods of optimism around manufacturing and energy transition. It corrected just as quickly when growth concerns surfaced. Treating silver as a cheaper version of gold did not work in 2025, the report added.
Outlook and risks
Experts, according to the report, have urged caution going forward. Some believe global inflation expectations may be overstated. A sharper rise in inflation next year could limit rate cuts. It could also strengthen the US dollar and increase volatility in precious metals.
Gold and silver remain effective long-term assets. However, prices can swing sharply in the short term. This risk is especially pronounced in silver, the report concluded.
Also Read: Gold, Silver Hit Fresh Records On Rate-Cut Hopes And Safe-Haven Buying https://www.vibesofindia.com/gold-silver-hit-fresh-records-on-rate-cut-hopes-and-safe-haven-buying/
