Commodities emerged as the best-performing asset class in India in 2025, outperforming equities, bonds and most traditional assets, a report showed on Friday.
The report by Motilal Oswal Financial Services Ltd underscores that precious metals — particularly silver and gold — were the primary drivers of performance, supported by policy uncertainty, currency volatility, strong institutional participation, and persistent supply constraints.
Domestic silver prices surged by over 170 per cent, while domestic gold prices rose by more than 76 per cent, outperforming benchmarks such as the Nifty and the S&P 500. Rising gold-to-equity ratios through the year reflected sustained investor preference for precious metals even during risk-on phases.
Within precious metals, silver emerged as the standout performer. The gold–silver ratio declined sharply from around 110 to near 65, signalling faster price discovery and a decisive shift in leadership toward silver, said the report
This rally was underpinned by structural supply tightness, with global silver demand exceeding supply for the fifth consecutive year, alongside the second-highest industrial demand on record, driven by solar photovoltaics, electrification, electric vehicles, grid infrastructure, and emerging technology applications.
Manav Modi, Analyst–Commodities, Motilal Oswal Financial Services Ltd, said that 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 persistent macro uncertainty,” he mentioned.
Gold continued to strengthen its position as a strategic portfolio hedge in 2025. Central banks purchased more than 1,000 tonnes of gold annually, reinforcing long-term price support and accelerating the shift toward de-dollarisation.
Renewed ETF inflows in the second half of the year, combined with a weaker dollar index and rupee depreciation, further amplified domestic gold returns, said the report.
As per latest AMFI data, gold exchange-traded funds (ETFs) witnessed significant net inflows in December 2025, with the category recording Rs 11,646 crore, the highest monthly inflow on record.
The report further stated that that financial participation played a critical role in reinforcing commodity price trends during 2025.
Domestic gold and silver ETF assets under management increased by more than 150 per cent, while global ETF flows turned decisively positive in the latter half of the year.
Currency movements added further support, with a weaker dollar index and a depreciating rupee enhancing domestic commodity returns, it added.
Base metals delivered selective gains in 2025. Copper outperformed on the back of supply constraints, electrification trends, and investor interest, while aluminium posted steady gains supported by consumption from automotive, construction, and electrical sectors. Zinc remained relatively range-bound amid surplus conditions, despite periods of tight inventories.
Looking ahead, the report highlights that 2026 is likely to be a year of transition rather than disruption, building on the structural themes that enabled commodities to outperform in 2025.
Gold and silver are expected to retain their strategic relevance in early 2026, supported by continued central-bank and investor demand, limited mine supply growth, and relatively inelastic scrap flows.