Nifty lags gold, silver as precious metals surge over 50% in 12 months; What’s next?

Domestic equity markets have lagged in 2025. While the NSE Nifty index has managed a modest 5% gain so far this year, precious metals have outshone with a sharp rally, with gold and silver rallying 44% and 45%, respectively. Over the past 12 months, both metals have surged more than 50%. On the other hand, Nifty stood almost stable at 24,868, down 0.27%. With the festive season approaching, analysts remain bullish on the precious metals pack. For investors, the takeaway is clear: those who diversified into hard assets alongside equities have seen robust returns.

The price of gold climbed to Rs 1,09,013 per 10 grams on September 9, 2025, from Rs 75,746 per 10 grams on December 31, 2024. Likewise, silver, which offers dual exposure as a haven and an industrial growth play, jumped to Rs 1,24,650 per kg from Rs 85,488 per kg.

Analysts believe uncertain macroeconomic and global cues weighed on market sentiment in 2025. On the other hand, investors preferred precious metals in the current environment. In Q2 2025, global gold demand (including private investments) rose 3% year-on-year to 1,249 tonnes.

According to Axis Mutual Fund, a weaker US dollar, political pressure on the Fed to cut rates, and geopolitical uncertainties fuelled gold prices this year. The fund house believes gold prices are unlikely to see a steep correction unless the US government stops criticising the Federal Reserve or there is a breakthrough in resolving global trade and tariff issues.

At present, the dollar index is hovering around 97.71, down from 108 on December 31, 2024. Market analysts say weaker US jobs data is further dragging down the index. The US President has been pushing the Fed to cut rates faster and has criticised the central bank for not acting sooner.

Listing the factors in favour of silver, Axis Mutual Fund highlighted rising industrial demand, a demand-supply mismatch, and a weakening dollar. “Over half of total silver demand now comes from industrial uses. Silver has extensive industrial applications, especially in electronics and solar energy. On the other hand, silver is priced in US dollars, so when the dollar weakens, silver becomes relatively cheaper for buyers using other currencies, which usually increases demand and pushes prices up,” the fund house said, adding that 2025 is expected to be the fifth consecutive year where silver demand outstrips supply, leading to a deficit.

Silver-backed ETFs/ETPs have also seen record inflows of about 95 million ounces in the first half of 2025 (January-June). This already exceeds total silver ETF inflows for the whole of 2024. By mid-2025, global silver ETF holdings had hit 1.13 billion ounces, valued at over $40 billion—a record high.

In the futures market, institutional positioning underscores bullish sentiment: by the end of June, net long positions in silver futures were up 163% compared with the end of 2024, reaching their highest level since early 2021.

So, where should investors put their money right now--equities, gold, or silver? In an interaction with BTTV, Devarsh Vakil of HDFC Securities advised investors to allocate 5–10% of their portfolio to gold. Considering the recent run-up in precious metals, he expects Nifty earnings to significantly pick up in the second half. “At present, I would bet more on the Nifty with longer-term asset allocation,” Vakil said.

On the other hand, Sugandha Sachdeva of SSWealthStreet said, “It is important to have some allocation to gold and silver. Those who are sitting on the sidelines should wait for some correction. Overall, the outlook is positive for the precious metals pack. Gold may touch Rs 1,12,000-1,13,500 per 10 gram in the near term and Rs 1,25,000 per 10 gram in the next 12 months. Industrial demand for silver is picking up significantly. Robust demand will keep silver at higher levels. Silver may touch Rs 1,35,000 per kg by Diwali and Rs 1,50,000 per kg over the next one year. If you have high-risk appetite, silver should be in your portfolio.”