Gold, silver outlook: Will precious metals continue to outperform in FY26?

The increase in prices of precious metals outpaced other significant assets in the previous financial year, all thanks to the continuing geopolitical tensions in different parts of the world, large purchases of gold by central banks, inflation and economic uncertainties, monetary policies and interest rate dynamics, and investors’ growing interest in exchange-traded funds (ETFs). In the case of silver, industrial demand has also supported the trend.

Inflows into gold ETFs have surged by 98.54% year-on-year to Rs 1,979.84 crore in February 2025, compared to Rs 997.21 crore last year. The net AUM (assets under management) of gold ETFs has nearly doubled in the past year, reaching Rs 55,677.24 crore as of February 2025, compared to Rs 28,529.88 crore last year.

According to ICRA Analytics, investors favour Gold ETFs due to liquidity, transparency, cost-effectiveness, and ease of trading compared to physical gold. Gold is considered to be a “safe-haven” and amid the escalating geopolitical tensions investors prefer parking their funds in Gold ETFs as compared to investing in physical gold as there is no hassle of storing it. Also, there are concerns of purity and theft while investing in physical gold, which is not the case with Gold ETFs.

While gold advanced 32% to Rs 88,691 per 10 grams in FY25, silver jumped 36% to Rs 1,00,693 per kg. 

Sharing his views on the outperformance of the white metal, Naveen Mathur, Director-Commodities and Currencies at Anand Rathi Shares and Stock Brokers, said that silver remained on a continued upward trajectory this year, primarily driven by uncertain trade policies of the US amid safe-haven flows into the white metal.

“Silver fundamentals continue to remain strong, primarily guided by continued deficit forecast for the fifth consecutive year in 2025. Persisting industrial demand has also been the driver for a rise in prices over last 2-3 years. In addition, as US interest rates continued their downward trajectory through 2025,an increasing shift towards safe-haven assets like silver has also been seen this year,” Mathur said.  

Mathur is bullish on gold and silver for FY26. He added that global economies facing pressures from rising inflationary trends due to global trade war rhetoric amid indications of a slowdown in global growth in the first half of 2025 could keep the safe haven flows intact in precious metals this year. Global interest rates to continue to remain on a downward trajectory this year, where almost 2 to 3 quarter point cuts can be witnessed fromthe  US, leading to further investment flows into precious metals.  

In general, over 50% of silver demand comes from industrial applications, such as solar panels, electric vehicles (EVs), electronics, and 5G technology. The Silver Institute forecasts that industrial silver demand will grow by 3% in 2025, surpassing 700 million ounces for the first time, driven largely by the photovoltaic cells used in solar energy.

When asked whether silver will continue to deliver superlative returns in FY2026, Jigar Trivedi, Senior Analyst at Reliance Securities, said, “Silver’s dual role as both an industrial metal and a precious metal introduces volatility. Its price is more tied to economic cycles than gold’s. During economic downturns, industrial demand could weaken, dragging silver prices down, whereas gold typically thrives in such uncertainty due to its safe-haven status.”

He added that The Silver Institute is projecting a market deficit of 149 million ounces—the fifth consecutive year of a shortfall. This tightening supply, combined with robust industrial demand, could push prices higher.

“Silver’s industrial demand does position it as an emerging contender with potentially greater upside than gold in 2025, especially if green tech trends accelerate. Yet, its volatility and economic sensitivity mean it’s not a clear “better” investment—gold’s stability still holds strong appeal,” Trivedi said.