Following a remarkable year for precious metals in 2025, investment strategists are mapping out allocation approaches for gold and silver in 2026. Silver delivered an exceptional 170% return during 2025, while gold posted strong gains of 76.5%, setting the stage for strategic portfolio considerations in the new year.

Market Performance and Outlook Drivers

The precious metals rally has positioned both assets as key portfolio components, though their roles differ significantly. According to Ross Maxwell, Global Strategy Operations Lead at VT Markets, the gold versus silver debate in 2026 will largely depend on whether global markets prioritize growth or stability.

Gold's support factors include interest rate expectations, elevated government debt levels, and geopolitical tensions. Maxwell notes that any move toward lower real interest rates would reduce the opportunity cost of holding gold, while persistent fiscal imbalances could undermine confidence in fiat currencies.

Central Bank Policy Impact

Central bank policies emerge as a major influence for 2026. Rate cuts or a slowdown in quantitative tightening could push real yields lower and support gold prices further. Conversely, if real yields remain high and monetary policy stays credible, gold's price action could shift to a range-bound trajectory.

Jigar Trivedi, Senior Research Analyst at Reliance Securities, highlighted key gold drivers including strong safe-haven demand during geopolitical risk episodes, robust central bank net purchases particularly in Asia, and trends in inflation hedging and de-dollarization.

Silver's Industrial Advantage

Silver continues to carry higher volatility due to its strong connection to industrial demand across manufacturing, electronics, and clean energy sectors. This industrial exposure gives silver more aggressive upside potential during strong economic growth or reflationary periods, but also exposes it to sharper corrections during slowdowns.

Trivedi expects silver to benefit from investment demand growth and speculative flows, including ETFs, while noting that silver "historically displays higher volatility due to industrial and investment duality."

Strategic Allocation Recommendations

From a portfolio allocation perspective, both metals serve valuable but distinct roles. Gold functions as a defensive asset offering consistency, stability, and long-term wealth preservation. Silver takes on a more tactical nature, providing higher upside potential at the cost of greater volatility.

Maxwell emphasizes that "for 2026, gold remains better suited for risk management and portfolio protection, while silver may appeal to investors with a higher risk tolerance seeking growth-linked exposure."

The emerging expert consensus suggests investors may benefit from owning both metals, treating gold as a hedge and silver as a growth play. A suggested allocation strategy involves a 60:40 split favoring gold, acknowledging its macro support while maintaining room for silver's growth-linked exposure.

Key Macro Themes for 2026

Several macro themes are expected to shape the precious metals outlook:

• Monetary policy and real yields evolution
• Geopolitical risk developments
• Industrial growth linked to green transition
• Post-2025 market psychology shifts

In this dynamic environment, precious metals are expected to continue playing crucial roles in diversified investment portfolios, with the balance between gold and silver depending on individual risk tolerance and market outlook preferences.

ICICI Prudential AMC's Chief Investment Officer S Naren has issued a stark warning about precious metals showing signs of euphoria after their exceptional performance in 2025. The veteran fund manager advises investors to dial back their focus on gold and silver, which have dominated returns across multiple timeframes.

Precious Metals Rally Raises Euphoria Concerns

The warning comes after precious metals delivered extraordinary returns that positioned them as the best-performing asset class. Naren highlighted the risks in his 2026 outlook, noting that most global markets appear overvalued.

"The risks, however, remain," Naren said in his 2026 outlook posted on YouTube. "Most markets in the world look overvalued, particularly the US Nasdaq, and precious metals are showing signs of euphoria."

Indian Equities Show Resilience Despite Modest Returns

In contrast to the headline-grabbing rally in precious metals, Indian equities experienced what Naren described as "a year of hibernation." The Nifty ended 2025 with a relatively modest return of 10.5% but achieved a significant milestone by delivering positive annual returns for the tenth consecutive calendar year.

Despite strong macroeconomic fundamentals, including very low fiscal deficit, subdued inflation, minimal current account deficit and robust growth, the Indian rupee underperformed against all global currencies last year. In USD terms, Nifty delivered only about 4% return in 2025 due to currency depreciation, making Dalal Street the worst-performing major equity market globally.

Investment Strategy Recommendations for 2026

Naren expects a different trajectory for 2026, expressing optimism about India's market prospects. "We think 2026 should be different and India should outperform most markets in 2026," he said.

The fund manager recommends investors embrace asset allocation strategies and consider taking "a little bit of higher risk towards equity" compared to January 2025 levels, given Indian markets have trailed most global peers over the past year.

Key Investment Recommendations:

• Reduce focus on precious metals despite their strong performance
• Increase equity allocation compared to January 2025 levels
• Adopt flexible mandate schemes investing across all market segments
• Avoid concentrated bets on single areas or sectors

Long-term India Growth Story Remains Intact

Despite near-term challenges, Naren maintains confidence in India's long-term prospects. "We continue to like India's story, considering India is one of the best growth prospects in the next decade and has a very good demographic profile for long-term investors," he said.

The caution from India's seasoned money manager marks a notable shift for precious metals, which dominated investment returns through 2025 even as traditional equity markets faced headwinds.