Gold and silver delivered extraordinary performance in 2025, with both precious metals reaching multiple record highs across global and domestic markets. The exceptional rally has been driven by a combination of macroeconomic factors, geopolitical tensions, and structural supply-demand dynamics that continue to support bullish projections for 2026.

Stellar 2025 Performance Across Markets

Both metals achieved remarkable gains throughout 2025, significantly outpacing traditional asset classes and reflecting broader shifts in global investment patterns.

Globally, gold climbed nearly 70%, breaking the $4,500 per ounce mark after surpassing $4,000 in October, while silver skyrocketed over 128%, topping $80 per ounce. In India, MCX gold futures surged from around ₹75,000 to nearly ₹1,39,000–₹1,40,000 per 10 grams, representing a rise of nearly 78%, while silver futures jumped approximately 144%, approaching the ₹2.50 lakh per kg mark.

Key Drivers Behind the 2025 Rally

The surge in precious metals prices has been supported by multiple macroeconomic and structural factors creating a favorable environment for hard assets.

Primary Market Drivers:

• Persistent expectations of U.S. Federal Reserve rate cuts lowering real yields
• Softening U.S. dollar making gold more affordable internationally
• Heightened geopolitical tensions from Middle East conflicts to Venezuelan oil tanker blockades
• Sustained central bank purchases and record ETF inflows
• Structural supply deficit in silver for fifth consecutive year
• Surging industrial demand from solar, EVs, electronics, and AI infrastructure

According to Renisha Chainani, Head of Research at Augmont, "After an exceptional rally in 2025, gold and silver remain structurally well supported, even as prices enter a phase of consolidation." Silver particularly benefited from its official listing as a U.S. critical mineral and China's strict export controls, intensifying the squeeze on available stocks.

Major Bank Projections for 2026

Major financial institutions maintain bullish outlooks for both metals in 2026, with ambitious price targets reflecting continued structural support.

Survey data shows nearly 70% of institutional investors expect gold to rise, with 36% predicting it will breach $5,000 by the end of 2026. Silver is positioned to test the $100 per ounce level, driven by technical breakouts, structural supply deficits, and surging green-tech industrial demand.

Chainani stated that gold "could continue to trade with an upward bias, with year-end targets around $5,000 and $5,500," while silver "may test the $95–$100 range if supportive macro and supply conditions persist."

Indian Market Outlook and Investment Strategy

With global bullish momentum carrying into 2026, India's bullion market is positioned for continued strength, especially as rupee weakness adds another support layer.

Mahendra Luniya, Chairman of Vighnaharta Gold, projects that "Gold could reach around ₹3.42 lakh per tola before 2030," with the first target for 2026 around ₹1.78-1.82 lakh per tola. Physical demand is expected to remain robust due to strong seasonal purchases and growing trend of bullion as wealth-preservation asset.

For investors, experts recommend a balanced approach: booking partial profits to lock in gains while maintaining core holdings as hedge against volatility and inflation. Preferred investment modes include physical gold and silver for long-term wealth preservation, ETFs and mutual funds for liquidity, and systematic investment plans to smooth price fluctuations.

India's gold market is witnessing a fundamental shift as domestic prices reach record highs, prompting consumers to abandon traditional ornament purchases in favor of investment-grade products. The dramatic price surge is reshaping centuries-old buying patterns, with buyers increasingly prioritizing liquidity and cost-effectiveness over ceremonial jewelry.

Dramatic Price Rally Reshapes Consumer Behavior

Gold prices increased by 77% in India during 2025, significantly outpacing the Nifty 50 index's 9.7% gain. This exceptional performance has forced consumers to reconsider their traditional approach to gold purchases, particularly for weddings and festivals where ornaments were previously preferred.

Mumbai resident Prachi Kadam exemplifies this behavioral shift, telling Reuters: "It's hard to justify paying an additional 15% in making charges. So, I settled for a 10-gram coin this time." Her decision reflects growing consumer resistance to the premium costs associated with jewelry manufacturing.

Investment Demand Surges While Jewellery Sales Decline

World Gold Council data reveals the extent of this market transformation during the first nine months of 2025:

India-listed gold exchange-traded funds experienced remarkable growth, attracting ₹27,720 crores ($3.3 billion) in inflows equivalent to 28.7 tonnes. This brought total ETF holdings to 86.2 tonnes, demonstrating strong institutional and retail investor interest in gold-backed financial products.

Industry Adaptation and Consumer Strategies

Jewellers are responding to changing preferences by introducing innovative products. PN Gadgil Jewellers launched a lighter, lower-carat sub-brand in June to address price sensitivity. Chairman Saurabh Gadgil explained to Reuters: "Buyers want pieces that allow them to participate in gold ownership without feeling price pressure, and modern craftsmanship has made lightweight jewellery aspirational rather than entry-level."

Consumers are employing various cost-management strategies:

• Purchasing investment-grade bars and coins instead of ornaments
• Reducing jewelry weight to manage expenses
• Choosing lower-carat alternatives (18-carat and 14-carat pieces)
• Investing in gold ETFs for portfolio diversification

Kolkata resident Nibedita Chakraborty highlighted the financial impact, noting that "reducing the weight of a gold necklace by six or seven grams can save more than ₹1,00,000."

Market Outlook and Industry Predictions

Industry representatives expect this trend to persist for at least two years, mirroring patterns observed in international markets where high prices discourage ornament purchases. The India Bullion and Jewellers Association predicts continued price strength, with President Prithviraj Kothari stating: "Consumers are purchasing gold in the form of coins, bars or gold ETFs, assuming that the rally will continue."

Manufacturers report growing popularity of lower-carat pieces, particularly among younger consumers. DP Abhushan Ltd Chairman Santosh Kataria observed: "These pieces allow buyers to manage budgets while still enjoying appealing designs."

Analysts suggest that if gold continues outperforming other asset classes, the shift toward investment products may become permanently established, fundamentally altering India's traditional gold consumption patterns.