Commodities’ Strength Redraws the Market Picture, Precious Metals Emerge as Top Performers
Silver and gold outperform equities and bonds in 2025 amid policy uncertainty and strong institutional demand
New Delhi: Commodities emerged as the best-performing asset class in India in 2025, outperforming equities, bonds, and most traditional assets, according to a report released on Friday.
The report by Motilal Oswal Financial Services Limited said that precious metals—particularly silver and gold—were the key drivers of performance, supported by policy uncertainty, currency volatility, strong institutional participation, and persistent supply constraints. Domestic silver prices surged over 170 percent, while gold prices rose more than 76 percent, outperforming benchmarks such as the Nifty and the S&P 500. The steadily rising gold-to-equity ratio throughout the year reflected investors’ continued preference for precious metals even during risk-on phases.
Among precious metals, silver emerged as the top performer. The report noted that the gold-silver ratio declined sharply from around 110 to nearly 65, signalling rapid price appreciation and a decisive leadership shift towards silver. This rally was driven by structural supply deficits, with global silver demand exceeding supply for the fifth consecutive year, along with record-high industrial demand from solar photovoltaics, electrification, electric vehicles, grid infrastructure, and emerging technology applications.
Himanshu Modi, Analyst – Commodities at Motilal Oswal Financial Services Limited, said the performance of precious metals in 2025 reflects a clear shift in investor behaviour.
“Gold has evolved beyond a cyclical hedge into a strategic reserve asset, supported by sustained central bank buying, currency volatility, and ongoing macroeconomic uncertainty,” he said. In 2025, gold continued to strengthen its position as a strategic portfolio hedge, with central banks purchasing over 1,000 tonnes of gold annually, supporting long-term prices and accelerating the move toward de-dollarisation.
The report added that renewed ETF investments in the second half of the year, combined with a weaker dollar index and depreciation of the rupee, further boosted domestic gold returns.
According to the latest AMFI data, gold exchange-traded funds (ETFs) recorded significant net inflows in December 2025, with ₹11,646 crore flowing into the category—the highest-ever monthly inflow. Financial participation played a crucial role in reinforcing commodity price trends during 2025, the report said. Assets under management in domestic gold and silver ETFs rose by over 150 percent, while global ETF flows turned decisively positive in the second half of the year. Currency movements also provided support, as a weaker dollar and falling rupee enhanced domestic commodity returns.
In base metals, performance was selective in 2025. Copper outperformed due to supply tightness, electrification trends, and rising investor interest, while aluminium saw steady gains supported by demand from the automotive, construction, and electrical sectors. Despite oversupply concerns, zinc remained relatively range-bound, even during periods of low inventories.
Looking ahead, the report expects 2026 to be a year of transition rather than major disruption, anchored in the structural themes that drove commodity outperformance in 2025. Gold and silver are expected to retain their strategic importance in early 2026, supported by continued demand from central banks and investors, limited mine supply growth, and relatively inelastic scrap flows.
