Gold and silver have gained 30% in last 1 year: What to expect in 2025

In the past year, both gold and silver have surged by 30%, driven largely by global uncertainties, including the recent US election, which traditionally boosts gold as a safe-haven asset. However, following Donald Trump’s victory, gold prices have seen a correction over the past month. Analysts predict that gold will remain rangebound in 2025 as market dynamics stabilize.

 

Conversely, silver may experience a more robust upward momentum. Its diverse industrial applications—such as in electronics, solar panels, advanced healthcare, and electric vehicles—are contributing to sustained demand. Additionally, ongoing supply-side challenges are pushing silver prices higher, and these issues are expected to persist, maintaining buoyancy in the market.

 

A key factor influencing commodity prices is the DXY index; a reversal in this index could have positive implications for metals. Should the DXY decline, it could trigger a rally in both gold and silver. 

"After this rally, gold is expected to remain rangebound in 2025. Silver, on the other hand, may witness momentum on the back of its usage in various industrial applications including electronics, solar panels for renewable energy, advanced healthcare and electric vehicles. Various supply-side challenges also led to higher prices of silver – a situation unlikely to improve soon. We may expect the silver prices to remain buoyant. A reversal in the DXY index may be positive for commodities. Hence a rally in metals may be expected if the DXY reverses," said Deepak Ramaraju, Senior Fund Manager, Shriram AMC.

 

Central bank monetary policies have played a crucial role in shaping market conditions. The Federal Reserve's recent announcement of a 50 basis point rate cut aims to stimulate the economy amid easing inflation. Despite softening job growth, positive GDP figures suggest economic stability, although future rate cuts may be more cautious. The political landscape, particularly under President-elect Trump, could also influence market expectations.

 

Geopolitical tensions, especially in the Middle East, have heightened demand for gold and silver as safe-haven assets. The ongoing conflict between Israel and Hamas, combined with potential ceasefire discussions, adds complexity to market dynamics. 

While central bank policies and geopolitical risks are significant drivers of gold and silver prices, other factors also play a role in shaping the market. In 2024, global demand for precious metals has increased substantially.  Central banks worldwide, including those in emerging markets, have been net buyers of gold for over a decade. In 2024, they collectively purchased more than 500 tonnes of gold, reflecting a strategy to diversify reserves amid economic uncertainties.  This growing interest from central banks has added upward pressure on prices, as these institutions accumulate gold as a hedge against the volatility of fiat currencies.  The recent resurgence in gold ETFs, which had seen outflows in previous years, indicates renewed investor interest in gold as a safe-haven asset.  In India, domestic demand has surged, with assets under management in gold and silver ETFs surpassing Rs 30,000 crore and Rs 7,500 crore, respectively.  Additionally, the reduction of import duties on gold and silver by the Indian government has spurred demand, especially during festive and wedding seasons, further driving up prices.  Overall imports for both gold and Silver on the domestic front has been quite sharp with this year, totalling to more than 700 tonnes and 6000 tonnes respectively.  Gold has performed on both domestic as well as on COMEX however, interestingly returns differ between both. This difference is amidst drop in import duty by 9% and 2% rupee depreciation.

 

“Looking ahead, the outlook for gold and silver remains positive, although some market consolidation or short-term dips may present buying opportunities. Loose monetary policy environment, coupled with ongoing geopolitical risks, should continue to provide a favourable backdrop for gold and silver. Central banks’ ongoing support for their respective economies, combined with the persistent demand for safe-haven assets, suggests that the upward momentum in these precious metals could continue. China still remains a big question mark in terms of the overall growth however, above mentioned factors could continue to support both Gold and Silver prices. Amidst current actions i.e. the stimulus measures work in favour of China, that recovery could also support metal prices, especially industrial metals including Silver. For investors, a buy-on-dips strategy appears prudent," said Manav Modi, commodity analyst at Motilal Oswal. 

 

Looking ahead to 2025, analysts at Motilal Oswal Wealth Management remain positive about gold and silver prices, citing ongoing geopolitical risks and central bank support. Silver may particularly benefit from its industrial applications, while gold is expected to maintain a strong position as a hedge against uncertainty. A buy-on-dips strategy is recommended for investors, with gold targets set around Rs 81,000 domestically and $2,830 on COMEX, while silver could see targets of Rs 1,11,111 and beyond. 

“Silver is down, but not out”, as it takes a breather before the next leg up, we remain positive over the medium to long term prospects. Support are near Rs 85,000- Rs 86,000; for targets towards Rs 1,11,111 and Rs 1,25,000 on domestic front & $38.55 and $43 on Comex. Buying on dips is recommended from a 12-15 month perspective," said Modi.  For Gold: Motlilal maintains a positive bias and have revised its upward potential target towards Rs 81,000 on the domestic front. Over the next two years, Gold could be on track for the targets of Rs 86,000, hence “Buy on dips" is recommended.