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Gold and silver prices have hit record highs, with gold above $4,200 and silver up 60% in 2025.
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Precious metals rally is supported by strong central bank buying, ETF inflows, and Asian demand.
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Analysts expect the bullish trend to continue amid festive demand, weak dollar, and supply constraints
Gold and silver prices soar to new record highs
The gold and silver prices have been on a spectacular rally through 2025, showing no signs of slowing down. Gold surged past the $4,000-per-ounce mark and touched a record high of $4,242 per ounce in international markets. On the domestic front, gold on the Multi Commodity Exchange (MCX) jumped by ₹1,185 in a single day to hit ₹1,28,395 per 10 grams — a fresh all-time peak compared to ₹1,27,210 in the previous session.
Meanwhile, silver prices have risen even more sharply, gaining over 60% year-to-date. This outperformance of silver compared to gold reflects strong industrial demand and tightening supply in key manufacturing sectors like solar panels, electric vehicles, and electronics.
Precious metals rally fuelled by strong demand and central bank buying
The current precious metals rally is being powered by a combination of strong buying by central banks, consistent ETF inflows, and robust physical demand from Asian markets. According to Motilal Oswal, gold’s domestic price could reach as high as ₹1.35 lakh per 10 grams in the near future.
“While short-term corrections may occur, gold and silver are supported by central bank purchases, ETF inflows, and structural demand from Asia,” said Manav Modi, Analyst – Commodities & Currencies at Motilal Oswal.
Global central banks have been among the largest buyers of gold in 2025, collectively adding over 600 tonnes of the yellow metal between January and September. At the same time, gold ETFs recorded inflows of around 450 tonnes — the highest level since 2020. These two major sources of demand have significantly strengthened market sentiment, providing a stable base for the ongoing rally.
Gold and silver prices supported by festive and cultural demand
In India, gold and silver prices have received additional support from the festive season. The demand for gold traditionally spikes ahead of Diwali and Dhanteras, driven by both cultural and investment sentiment. Historical data shows that in seven out of the past ten festive seasons, gold prices have climbed during the pre-Diwali period.
Motilal Oswal’s research indicates that this pattern is repeating in 2025 as well, with Indian consumers and jewellers actively buying ahead of the festival. Such pre-festival optimism often leads to higher prices before the actual holiday, supported by strong retail and wedding-season purchases.
Precious metals rally backed by macroeconomic tailwinds
The broader precious metals rally is also being influenced by global economic trends. The weakening U.S. dollar index, coupled with expectations of more interest rate cuts by the U.S. Federal Reserve, is creating a favourable environment for gold and silver. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to both institutional and retail investors.
Political uncertainties in major economies such as Japan and China have also pushed investors toward safer assets. These global factors, along with a cautious outlook for equity markets, are contributing to the continued strength of precious metals.
Gold and silver prices rise amid tightening supply
Another key reason behind the surge in gold and silver prices is the tightening supply situation. Mining production is facing multiple challenges such as lower ore grades, higher extraction costs, and stricter environmental rules. These factors have limited new gold supply globally, while recycling activity has increased only modestly.
For silver, the situation is even more critical. The world is witnessing its fifth consecutive year of a supply deficit in the silver market. Industrial demand — especially from renewable energy and electric vehicle manufacturing — continues to outpace supply. This has caused the gold-silver ratio, which had earlier peaked near 110, to narrow down to around 81–82.
The narrowing ratio indicates that silver is rising faster than gold, making it a stronger performer in percentage terms.
Precious metals rally gains strength from institutional and sovereign demand
Institutional investors and governments have both played a crucial role in the precious metals rally. Central banks around the world are diversifying their reserves away from the U.S. dollar, increasing their exposure to gold as a stable long-term asset.
“Central bank diversification is redefining the bullion market, aligning institutional and sovereign demand with long-term value creation,” said Navneet Damani, Head of Research – Commodities & Currencies at Motilal Oswal.
This shift in global reserve management has reinforced the perception of gold as a safe and dependable asset class, while silver’s industrial relevance ensures its continued inclusion in diversified investment portfolios.
Gold and silver prices outlook: Can the rally continue?
Looking ahead, analysts believe the gold and silver prices are unlikely to lose momentum any time soon. The combination of high central bank demand, strong retail interest, and structural supply challenges creates a bullish setup for both metals.
Motilal Oswal maintains that domestic gold could reach ₹1.35 lakh per 10 grams in the coming months, while silver’s continued industrial demand may sustain its impressive gains. Unless there is a major global economic shift or a significant rise in interest rates, the outlook for precious metals remains firmly positive.
In short, both gold and silver are expected to continue shining brightly — supported by macroeconomic stability, festive demand, and investor confidence in their long-term value.
