Gold’s 74% rally rewrites 2025 investment playbook

Gold’s robust surge in 2025 has done more than generate eye-popping returns it has signalled a deeper economic shift. Economists say the rally reflects a classic flight to safety as investors reposition portfolios amid tariff wars, geopolitical tensions and aggressive central bank accumulation.In early April 2025, gold was priced at ₹91,500 per 10 grams. By the end of July, it climbed to ₹1,01,400 — a rise of ₹9,900 in just four months, translating into a 10.8% short-term jump. On a full-year basis, prices surged an extraordinary 74%, marking one of the sharpest annual gains in recent decades.To put that in perspective: an investment of ₹10 lakh at the beginning of the year would have swelled to nearly ₹17.4 lakh at peak levels — a ₹7.4 lakh gain in a single year.
Capital Flees Risk, ETFs See Record Inflows
The rally coincided with volatility in Indian equity markets. As benchmark indices struggled, investors poured money into gold and silver exchange-traded funds (ETFs). Gold ETF assets under management (AUM) across India surged 173%, closing at approximately ₹1.2 lakh crore in 2025. In simple terms, every ₹100 invested a year earlier expanded to nearly ₹273 — a dramatic reallocation of capital.Economists describe this as a textbook capital rotation: when risk assets wobble, liquidity seeks tangible stores of value.
History Repeats in Times of Crisis
Gold’s behaviour in 2025 mirrors past crises. During the 2008 global financial collapse, gold rose nearly 25% while equities plunged. After the 9/11 attacks, risk aversion drove renewed buying. In 2020, amid the COVID-19 pandemic, gold surged nearly 40%. Even during the 1929 Great Depression, while equities lost 80–90% at the trough, gold preserved value.“Gold is less about speculation and more about insurance during systemic stress,” economists note.
Correction After Record Highs
After touching ₹1,01,400 per 10 grams, gold corrected about 16%. That implies a drop of roughly ₹16,000, bringing prices closer to the ₹85,000–₹87,000 range. Analysts attribute the fall to profit-booking and portfolio rebalancing rather than a reversal of the broader trend.Silver, meanwhile, proved more volatile. After rallying to record highs, silver prices declined nearly 43% from their peak. Its earlier surge was fuelled by supply shortages, strong industrial demand in electronics and solar manufacturing, and investment inflows.
Outperforming Every Traditional Asset
From an asset-allocation standpoint, gold’s 74% rise dwarfed other investment avenues:
•Equities: Benchmark returns of 10–15% pale against gold’s manifold surge.
•Real estate: Residential prices in major cities rose 5–12% annually — far below gold’s explosive performance.
•Fixed income: Bank deposits and bonds yielded 6–8%, making gold’s returns nearly nine to ten times higher.
A Perfect Confluence for Metals in 2026
Economists argue that the momentum has extended into early 2026 due to a “perfect confluence” of factors. Intensifying geopolitical tensions — including developments around Ukraine, Gaza and trade escalations under US President Donald Trump — have heightened uncertainty. Pressure on Caracas and broader West Asia tensions have further unsettled markets.At the same time, supply disruptions in key mining regions such as Chile, Peru and Indonesia, along with declining ore grades, have restricted the output of copper, silver and aluminium. Export restrictions from China on metals like silver, tungsten and antimony have tightened global supplies.On the demand side, green energy expansion and artificial intelligence infrastructure have widened the supply-demand gap particularly for silver used in solar panels, electric vehicles and advanced hardware systems.Add to that inflationary pressures, expectations of US Federal Reserve rate cuts in 2026 and a weakening dollar, and non-yielding assets like gold become increasingly attractive.“Metals are once again being viewed as financial insurance, not merely speculative instruments,” economists observe.
Retail Demand Muted, Central Banks Steady
Despite bullish investment demand, jewellery purchases have softened at elevated price levels. Consumers are either postponing buying decisions or shifting to lower-carat jewellery to manage costs.Central banks, however, continue to accumulate gold reserves as protection against currency volatility and geopolitical fragmentation.
What Lies Ahead?
Gold’s 2025 rally underscores a broader economic narrative: when macroeconomic uncertainty intensifies, capital gravitates toward tangible assets. The 173% jump in Gold ETF AUM, compared to modest gains in equities and real estate, highlights how investor psychology shifts during turbulent cycles.While prices have cooled from record highs, structural drivers geopolitical risk, fiscal stress in major economies, AI-related asset bubbles and sustained central bank buying — remain intact.Whether gold consolidates or stages another breakout will depend on global trade dynamics, monetary policy signals and overall risk sentiment. For now, bullion has firmly reasserted its place at the centre of portfolio strategy in an increasingly uncertain world.

(Business Correspondent)