Gold has historically performed strongly during periods of economic turbulence. For instance, during the 2008 financial crisis, gold prices doubled between January 2008 and August 2011.
Similarly, the Covid-19 pandemic saw gold rise 53% in early 2020.
This year, gold has again reached all-time highs, driven by several factors:
- Central bank purchases: Central banks worldwide have nearly doubled their gold reserves over the past decade, with India’s reserves also steadily increasing.
- US Fed rate cuts: The 25-basis point rate cut in September 2025 led to a rally in gold. Further cuts are expected, which typically weaken the dollar and boost gold prices.
- Geopolitical uncertainty: Ongoing tensions, including the Russia–Ukraine conflict and unrest in the Middle East, have fueled demand for safe-haven assets.
- Rupee depreciation: With over 85% of India’s gold imported, a weaker rupee amplifies local demand and returns.
Tata Mutual Fund expects gold to consolidate in the $3,500–$4,000/oz range in the short term.
Investors may consider using market dips to accumulate gold as a long-term hedge against inflation, currency depreciation, and geopolitical risks.
Silver: A strong complement to gold
Silver has experienced an even more remarkable run this year, rising nearly 61% from $28.92 per ounce in January to over $46 by September.
Unlike gold, a significant portion of silver demand—around 60%—comes from industrial usage, particularly in electronics and green technologies.
Key drivers include:
- Industrial demand: Recovery expectations in China and robust global industrial activity have fueled silver prices.
- Fed rate cuts and dollar depreciation: Similar to gold, lower US interest rates support silver’s rally.
- Supply deficit: The global silver market is expected to remain in deficit for a fifth consecutive year, enhancing price momentum.
- Rupee weakness: With India importing about 92% of its silver demand, a weaker rupee amplifies domestic returns.
Gold-silver ratio: The ratio has slipped from 85 to around 81, signaling silver’s potential outperformance relative to gold in the coming months.
Tata Mutual Fund suggests a balanced approach for investors: a 50:50 allocation between gold and silver could harness silver’s industrial growth story while maintaining gold’s strategic safe-haven appeal.
Long-term perspective
Over the past 30 years, gold has delivered average annual returns of 7.6% in dollar terms (11% in rupee accounting for rupee depreciation), while silver returned 6.4% in dollar (9.8% in rupee).
Both metals remain long-term wealth preservers, with silver offering potential for higher relative gains in the medium term due to industrial demand recovery and a persistent supply deficit.
First Published: Oct 3, 2025 5:35 PM IST