Why Tata Mutual Fund is betting on gold, silver for 2025 portfolios

Gold and silver have emerged as attractive avenues for portfolio diversification in 2025, according to Tata Mutual Fund. "Investors looking to diversify their portfolios may find gold and silver attractive, according to the latest insights from Tata Mutual Fund." Gold, in particular, has historically shown resilience during periods of global financial stress, doubling in value during the 2008 crisis and climbing 53% during the onset of the Covid-19 pandemic.

This year, several factors have propelled gold to all-time highs, including a nearly twofold increase in central bank reserves over the past decade, India’s ongoing accumulation, a 25-basis point US Federal Reserve (Fed) rate cut in September 2025, and the rupee’s depreciation. As more than 85% of India’s gold is imported, local returns are amplified by the weaker currency.

Tata Mutual Fund projects that gold will consolidate within the $3,500–$4,000 per ounce band in the near term, noting, "Tata Mutual Fund expects gold to consolidate in the $3,500–$4,000/oz range in the short term."

The fund house further advises, "Investors may consider using market dips to accumulate gold as a long-term hedge against inflation, currency depreciation, and geopolitical risks." The context for this recommendation includes ongoing international tensions, such as the Russia–Ukraine conflict and Middle Eastern unrest, which have continued to drive demand for safe-haven assets. The anticipated trajectory is supported by expectations of additional Fed rate cuts, which typically weaken the dollar and bolster gold prices.

Silver has substantially outpaced gold’s gains, appreciating nearly 61% from $28.92 per ounce in January to above $46 by September 2025. Unlike gold, which primarily serves as a safe-haven, about 60% of silver demand stems from industrial applications, especially in electronics and green technologies.

Silver’s recent rally is attributed to robust industrial recovery in China, global industrial activity, sustained Fed policy support, and ongoing supply deficits—the global silver market is set for a fifth consecutive year in deficit. With India importing approximately 92% of its silver demand, the rupee’s weakness has also provided a boost to domestic silver returns. The gold-silver ratio, which has slipped from 85 to around 81, suggests silver may continue to outperform gold in the coming months.

In navigating the evolving market landscape, Tata Mutual Fund proposes a balanced investment split between gold and silver. The fund house noted, "Tata Mutual Fund suggests a balanced approach for investors: a 50:50 allocation between gold and silver could harness silver’s industrial growth story while maintaining gold’s strategic safe-haven appeal."

This approach seeks to capture silver’s potential for industrial-led growth while retaining gold's established role as a store of value. The recommendation reflects the dual nature of the metals: gold as a hedge against macroeconomic uncertainty and silver as a beneficiary of industrial expansion and supply tightness.

Historical performance data further support the long-term merits of investment in both metals. Over the past 30 years, gold has provided average annual returns of 7.6% in US dollar terms and 11% in rupee terms, factoring in currency depreciation. Silver has delivered 6.4% returns in dollar terms and 9.8% in rupee. The persistent supply deficit in silver and recovery in industrial demand position it for potentially higher relative gains in the medium term, whilst both metals continue to serve as reliable wealth preservers for investors seeking strategic portfolio diversification.