Gold and silver continued their exceptional momentum into 2026, with both precious metals posting strong gains on Friday as trading resumed following the holiday period. The metals are building on their record-breaking 2025 performance, supported by sustained institutional demand and multiple fundamental drivers.

Latest Trading Performance

Spot gold rose 0.9% to $4,351.70 per ounce on Friday, while spot silver jumped 2% to $72.63 per ounce. The strong Friday performance demonstrates continued investor appetite for precious metals as portfolio diversifiers and inflation hedges.

Record-Breaking 2025 Performance

Both metals delivered exceptional returns, with gold marking its largest annual gain in 46 years at 64%, while silver recorded its highest-ever yearly increase of 147%. Platinum achieved its largest annual gain ever at 127%, and palladium posted its best performance in 15 years with a 76% increase.

Analyst Perspectives and Market Drivers

Analysts attribute the sustained rally to multiple fundamental factors. Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho, said the metals rally highlights demand for "hedges against entrenching USD debasement risks."

Inderbir Singh Jolly, CEO of PL Wealth, emphasized the structural nature of the current rally. "The rally is not driven by short-term speculation but by sustained investment flows and continued central bank purchases," he noted, adding that elevated geopolitical risks, stretched equity valuations, and currency volatility have reinforced gold's role as a strategic hedge.

Rajeev Sharan, head of research at Brickwork Ratings, highlighted silver's historic surge, noting that the 140% increase mirrored gold's strong performance and pointed to broader shifts in portfolio positioning by investors and nations.

Market Outlook and Potential Challenges

Looking ahead, analysts expect gold and silver to remain supported by underlying factors including sustained central bank buying, robust ETF inflows, geopolitical uncertainty, and concerns over currency and inflation trends. Gold is likely to hover in the $4,500-5,000 per ounce range, with silver continuing to benefit from sustained investor interest.

However, some near-term challenges remain. Daniel Ghali, a senior commodity strategist at TD Securities, noted potential selling pressure from portfolio rebalancing, writing: "We expect a massive 13% of aggregate open interest in Comex silver markets will be sold over the coming two weeks, to result in a dramatic repricing lower."

Despite potential short-term consolidations, the fundamental drivers supporting precious metals remain intact, with analysts expecting continued strength based on structural shifts in investor behavior and ongoing macroeconomic uncertainties.

Bank loans against gold have emerged as the fastest-growing credit segment, surging 125% year-on-year to reach ₹3.50 lakh crore by November 2025, according to Reserve Bank of India data. This remarkable growth has been fueled by a significant rally in gold prices and the metal's enhanced collateral value, enabling borrowers to secure larger loans against their holdings.

Gold Price Rally Drives Loan Growth

The surge in gold loans coincides with a substantial price appreciation in the precious metal. Gold prices rose nearly 64% during 2025, reaching approximately ₹1.35 lakh per 10 grams of 24-karat gold. This price rally has directly translated into higher collateral values, making gold loans more attractive to both lenders and borrowers.

The growth trajectory of gold loans has been particularly impressive over recent periods:

Market Share Dynamics Shift

A notable development in the gold loan market has been the changing competitive landscape between banks and non-banking finance companies. Banks have now overtaken NBFCs in market share, holding 50.35% of the gold loan market, with the remainder accounted for by finance companies, according to RBI's latest Trends and Progress report.

Non-banking finance companies have also expanded their gold loan portfolios, with outstanding loans reaching ₹3.00 lakh crore according to industry estimates. Major players in the gold loan financing space include Muthoot Finance, Manappuram, and IIFL Finance.

Structural Credit Access Changes

"The sharp growth in gold loans reflects a structural shift in how small entrepreneurs and households access credit," said Manish Mayank, head of gold loan business at IIFL Capital. He emphasized that gold loans meet urgent, short-tenure working capital needs with speed, transparency, and minimal documentation requirements.

The secured nature of gold loans has created advantages for both parties involved:

• For lenders: Lower risk profile due to tangible collateral
• For borrowers: Affordable and flexible credit access
• Operational benefit: Minimal disruption to existing cash flows

Broader Credit Market Performance

While gold loans dominated growth, other credit segments showed varied performance. Vehicle loans climbed to ₹6.80 lakh crore by November-end, supported by GST cuts and festive offers, registering 11% growth. However, consumer durable loans contracted, likely due to the conclusion of festive season demand in October.

The combined gold loans of banks and NBFCs represented a 5.8% share in total outstanding loans as of September-end, according to RBI's Financial Stability Report. Trade sector credit showed the strongest growth at 14%, reaching ₹12.30 lakh crore, supported by government and RBI relief measures including loan moratoriums for exporters until December.