Following exceptional returns in the previous year, precious metals may be entering a phase of more conservative performance in the coming year. Market expert Dhiren Shah, smallcase manager and Co-Founder of Kamayakya, suggests that gold and silver investors should temper expectations for the year ahead, despite the metals' strong showing with a 10% gain in the previous year.

Precious Metals Outlook

Shah emphasizes that gold and silver have performed extremely well over the last 18 months but may not deliver such exponential moves in the coming year. The expert points to several critical factors that could determine precious metal performance.

The analysis suggests that much of the precious metals' returns may depend on these three fundamental drivers, potentially marking a shift from the momentum-driven gains seen in recent periods.

Market Context and Performance

The precious metals sector has experienced a remarkable run, with both gold and silver outperforming by wide margins in the previous year. This exceptional performance followed a broader trend of strong returns over an 18-month period, establishing precious metals as standout performers in the commodities space.

Shah's assessment comes at a time when markets have hit fresh record highs, with the expert noting that current market conditions suggest a more measured approach to precious metal investments going forward.

Broader Market Implications

The expert's outlook on precious metals aligns with a broader shift in market focus toward earnings, valuations, and stock-specific opportunities. As global markets navigate changing monetary policies and geopolitical uncertainties, precious metals are expected to maintain their role as portfolio diversifiers, albeit with potentially more modest returns.

Shah emphasizes the importance of monitoring central bank policies and geopolitical developments, as these factors will likely drive precious metal price movements more than speculative momentum in the coming year.

Investment Considerations

For investors considering precious metals exposure, Shah's analysis suggests a more nuanced approach may be necessary. Rather than expecting the outsized returns seen in the previous year, investors should focus on the fundamental drivers that support precious metals as portfolio components.

The expert's perspective highlights the cyclical nature of precious metal performance and the importance of understanding the underlying factors that drive long-term value in gold and silver markets. As global economic conditions continue to evolve, precious metals are expected to remain relevant investment options, though with potentially different return profiles than recent years.

Precious metals may see measured returns in the coming year after blockbuster performance in the previous year. Geopolitics, Fed policy, and central bank actions remain key potential triggers for gold and silver prices ahead.

Gold reclaimed centre stage in 2025, delivering one of its strongest annual performances in more than four decades as global uncertainty reshaped investor priorities. What began as a cautious search for protection gradually turned into a broad-based reallocation toward the yellow metal, driven by geopolitical risk, shifting monetary policy expectations and sustained institutional demand.

Historic Performance Metrics

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 U.S. 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.

Structural Demand Drivers

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.

Market Adaptation and Consumer Behavior

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, rising gold prices fostered a more selective consumer mindset, accelerating a shift away from transactional buying toward decisions rooted in emotion, meaning and legacy, according to industry participants.

Future Outlook and Market Expectations

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, with expectations of elevated central-bank buying and relatively low retail participation supporting continued strength in precious metals markets.