Gold prices have ascended by around 48% in YTD while silver has outshone gold in this cycle with gains of ~62% YTD, underscoring its dual role as both a safe-haven and an industrial metal. The sharp upswing in bullion prices is not driven by a single factor but rather a confluence of macroeconomic, monetary, and geopolitical triggers.
- Trade War Uncertainty: President Trump’s aggressive tariff strategy, including a recent 100% tariff on branded and patented pharma imports and other goods, has amplified global market jitters, pushing investors towards safe-haven assets.
- Monetary Easing: In its latest meeting, the U.S. Federal Reserve has already cut rates by 25bps, signalling further easing. With core PCE inflation holding steady at 0.2% MoM in August, market expectations are firming for another 25bps cut at the October meeting, reinforcing the bullish undertone in precious metals.
- Geopolitical Tensions: Russia’s forays into NATO airspace have heightened geopolitical risks, boosting gold’s appeal as a store of value.
- ETF and Central Bank Demand: Bullion-backed ETF holdings are at their highest in two years, while central banks continue accumulating gold at a record pace.
- Silver’s Unique Tailwinds: Beyond safe-haven demand, silver is facing structural supply deficits for the fifth straight year, with demand outpacing supply by over 100 million ounces. Rising use in solar panels, aligned with China’s carbon-cut pledges and supply disruptions such as the Grasberg mine force majeure, are magnifying the rally.
Gold vs Nifty 50
Amid the bullion’s meteoric rise, equities have lagged. On 27 September 2024, the Nifty was at 26,277.35. A year later, on 26th September 2025, it slipped to 24,654.70, a decline of over 6%. Over the same period, gold surged from ₹79,337/10gm to ₹113,788/10gm, delivering gains of 42%+. With Indian equity valuations relatively inexpensive compared to bullion, the stage may be set for equity outperformance. However, Gold and silver must continue forming 10–15% of a well-balanced portfolio, as a hedge against inflation, geopolitical shocks, and systemic risks. Yet, with valuations attractive, investors should also prepare for a potential multi-year equity catch-up rally.
