Over the course of the year, bullion prices surged between 66% and 74%, marking gold’s largest annual gain since 1979—a period similarly defined by geopolitical upheaval and economic stress.
The scale of the rally placed gold among the world’s best-performing assets, outpacing most equity benchmarks.
The macro backdrop: Why gold thrived
The rally unfolded against a complex global backdrop. Early 2025 was dominated by tariff rhetoric, geopolitical flashpoints and fragile market sentiment.
As inflation pressures eased and central banks pivoted toward accommodation, gold’s appeal strengthened.
Interest rates in India fell by about 75 basis points, while the US Federal Reserve moved cautiously toward easing.
Minutes from the Fed’s December meeting revealed a nuanced debate over economic risks, reinforcing uncertainty around the path of growth and policy.
“Gold rallied during the year as a safe-haven asset amid global uncertainty,” said Nehal Mota, Co-Founder and CEO of Finnovate, noting that markets were driven more by global cues than domestic fundamentals for much of the year.
Who bought the rally: Central banks, ETFs and long-term capital
Unlike short-lived commodity spikes, gold’s 2025 rally was anchored in structural demand.
Central banks continued to accumulate gold as part of reserve diversification strategies, while investors increased exposure through exchange-traded funds during periods of equity volatility.
“Gold ETFs were quiet heroes of the year,” said Nikunj Saraf, CEO of Choice Wealth, adding that persistent central-bank buying and investor demand for safety amid geopolitical and inflation concerns provided durable support to prices.
According to Samit Guha, Managing Director and CEO at MMTC-PAMP, gold consumption remained primarily investment-led, reflecting its role as a safe-haven asset during economic uncertainty.
He also pointed to rising participation from younger investors and strong demand for high-purity gold products from LBMA-accredited providers.
Jewellery adjusts: Selective demand, structural change
Higher bullion prices reshaped consumer behaviour in the jewellery market. Discretionary purchases softened, while trust-driven and occasion-led categories proved more resilient.
“2025 has been a year of structural recalibration rather than speculative excess,” said Ankur Daga, Founder and CEO of Angara, noting that jewellery brands absorbed part of the commodity volatility instead of fully passing it on to consumers.
At the premium end, Jignesh Mehta, MD and Founder of Divine Solitaires, said rising gold prices fostered a more selective consumer mindset, accelerating a shift away from transactional buying toward decisions rooted in emotion, meaning and legacy.
What comes next: Volatility without a reversal
After such an exceptional year, most market participants expect periods of consolidation rather than a reversal in trend.
“A correction after a sustained rally would be healthy,” said Ross Maxwell, Global Strategy Operations Lead at VT Markets, adding that gold’s monetary hedge characteristics and central-bank support give it a structural advantage as a core allocation.
Brokerages remain constructive on the medium-term outlook. UBS expects gold prices to reach $5,000 per ounce by September 2026, while Goldman Sachs has called gold its “single favourite long commodity,” citing expectations of elevated central-bank buying and relatively low retail participation.