Silver surged 38% before Diwali 2025: Why the white metal could be riskier than gold this festive season

Silver delivered spectacular returns ahead of Diwali 2025, outperforming gold by a wide margin. However, as investors prepare for Diwali 2026, analysts caution that the white metal's higher return potential comes with significantly greater volatility, making it a riskier investment during periods of global economic uncertainty.

According to Motilal Oswal Financial Services' November 4 commodities report, silver surged approximately 38% in the 30 days preceding Diwali 2025, compared with gold's nearly 19% gain.

The sharp rally highlights silver's ability to outperform gold during favourable market conditions. However, the brokerage notes that silver also experiences deeper corrections when market sentiment deteriorates.

Why silver is more volatile than gold

Gold and silver are both precious metals, but their price movements are influenced by different demand dynamics.

Gold is primarily viewed as a store of value and safe-haven asset, supported by central-bank purchases, investment demand and geopolitical uncertainty.

Silver, meanwhile, has a dual role as a precious metal and an industrial commodity. Consequently, its prices are sensitive not only to investment flows but also to expectations surrounding industrial activity and economic growth.

Motilal Oswal noted that gold surged to nearly $5,600 per ounce in January 2026 before correcting below $4,000 and subsequently recovering.

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Silver crossed $100 per ounce during the same period before witnessing an even sharper correction.

Does Diwali guarantee higher returns?

Historical trends suggest that precious metals often perform strongly ahead of Diwali, but festive demand does not guarantee sustained price increases.

Motilal Oswal's analysis of the past decade shows that gold generally performed better during the 30 days preceding Diwali than during the following month.

In 2025, gold gained approximately 19% before Diwali but declined around 5% in the subsequent 30 days.

The brokerage explains that Diwali primarily influences domestic physical demand, jewellery purchases and investor positioning. International bullion prices remain more sensitive to US interest rates, Treasury yields, the dollar and geopolitical developments.

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What should investors do this Diwali?

The report identifies elevated US bond yields, persistent inflation and expectations of further Federal Reserve tightening as near-term risks for precious metals.

However, central-bank diversification, geopolitical uncertainty and investment demand continue to provide longer-term support.

Indian investors have also maintained interest in precious metals through exchange-traded funds. September 2026 saw gold ETF inflows of approximately ₹4,450 crore, while silver ETFs attracted ₹1,970 crore, according to the report.

For investors, gold may serve as a relatively defensive portfolio diversifier, while silver offers greater upside potential alongside sharper downside risks.

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Rather than chasing exceptional historical returns, investors should assess their risk tolerance, investment horizon and existing precious-metal exposure.

The key takeaway: Silver's 38% pre-Diwali rally in 2025 demonstrates its return potential, but past performance offers no assurance of similar gains in 2026. A disciplined, staggered investment approach may help manage the risks of entering after sharp rallies