As the rally in precious metals takes centre stage in 2025, most analysts recommend a larger allocation to gold over silver despite the latter’s outperformance this year.

Photograph: Arnd Wiegmann/Reuters

In the current calendar year (CY25), spot gold prices in dollar terms rallied 47 per cent to a record $3,897 on Friday, while spot silver has surged 62 per cent to $48.5, outperforming major asset classes.

As of Wednesday, MCX spot gold was up 54 per cent to Rs 1,17,000 per 10 grams, while silver was up 68.7 per cent to Rs 1,45,000.

The equity benchmark Nifty and Sensex have given a mere 5 per cent gain, while the broader Nifty Midcap and Smallcap have been in the red thus far in CY25, ACE Equity data shows.

Even among other non-conventional investment avenues, gold and silver have outperformed, with the largest cryptocurrency, bitcoin, having risen by 22.2 per cent.

The rally this year was mostly fuelled by central bank purchases, geopolitical concerns and tariff uncertainty, analysts said.

Most agreed that there was still upside left in the rally, although a temporary dip could be possible, which could be used to buy for the long term.

Between the two precious metals, analysts prefer allocating more to gold given its “safe-haven” appeal.

“This is an opportune moment to participate,” and “it’s still the early innings of a long commodity supercycle,” Harshal Dasani, business head at INVasset PMS.

A balanced split works best with 60 per cent in gold for stability and a monetary hedge, and 40 per cent in silver for higher beta and growth-linked upside, Dasani said.

“Gold provides insurance against macro shocks, while silver’s industrial story could lead to outsized gains.”

It is time to focus more on gold rather than silver, said G Chokkalingam, founder and head of research at Equinomics Research, as silver has been more volatile.

“Steady demand is likely to keep gold prices firm, hence, gold is likely to outperform silver in the short term.”

However, Gaurang Shah, senior vice-president at Geojit Investments, said that both precious metals are due for a correction, which will not be too deep.

“From a long-term perspective, one can invest at the current levels in a staggered manner on any dips.”

Any bull run comes with some healthy correction, and hence, a certain amount of cool-off in the name of profit-booking could be seen, Manav Modi, analyst, precious metal, research at Motilal Oswal Financial Services Ltd., said.

“Any cool-off in the tariff tensions, geopolitical risks or change in rate cut expectations, there could be a near-term correction.”

For investment purposes, digital gold in the form of exchange-traded funds (ETFs) and mutual funds (MFs) is more effective over the physical form, analysts said, citing storage costs, making charges, and liquidity challenges.

Silver is even more difficult to hold physically due to bulk and purity risks, Dhasani said.

“Here too, ETFs or exchange-traded platforms offer a better solution.”

On a broader investment scale, Modi said that investment allocation in an investor’s portfolio should be based on one’s risk profile and tenure of investment.

“At least 10 per cent of the allocation is advised in Gold and Silver of the total portfolio.”

Gold, silver price outlook

As regards prices, spot gold is likely to extend its rally on a weak dollar and lower US treasury yields across the curve, according to a recent note from ICICI Securities.

Further, expectation of sluggish growth in the US job markets would also support the bullion to trade higher, it said.

Additionally, the risk of the US government shutdown would provide support to the bullion, it said.

MCX Gold December is expected to rise towards the Rs 117,500 level as long as it stays above the Rs 115,200 level, ICICI Securities said.

MCX Silver December is expected to rise towards the Rs 145,500 level. Key support for the December futures exists near the Rs 141,700 level.

Given the sharp run in the recent weeks, Apurva Sheth, head of market perspectives & research, SAMCO Securities, expects silver to consolidate in the range of Rs 145,000 to Rs 135,000 and Gold to consolidate in the range of Rs 118,000 to Rs 114,000 in the immediate term.