MOHAMMAD ZIYAUDDIN
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Gold is expected to remain a key investment asset in 2025, with central banks and Gold Exchange Traded Fund (ETF) investors playing a crucial role in driving demand, according to a recent Motilal Oswal Private Wealth report.
With geopolitical tensions and economic uncertainties persisting, gold prices are likely to rise, as central bank policies and investor sentiment shape the precious metal market.
Gold’s Strong Performance in 2024
Gold was one of the best-performing asset classes in India, delivering a 21% year-on-year (YoY) return in 2024.
Gold ETFs in India saw record inflows of ₹112 billion, adding 15 tonnes to total holdings, which reached 57.8 tonnes by year-end.
The Reserve Bank of India (RBI) continued accumulating gold, purchasing 72.6 tonnes in 2024, increasing its total reserves to 876 tonnes.
Gold now constitutes 10.6% of the RBI's foreign exchange reserves.
Key Takeaway: Despite high prices affecting jewellery demand, investment in gold bars, coins, and ETFs remained strong, reflecting investor confidence in gold as a safe-haven asset.
Gold Demand Outlook for 2025
Central banks will continue buying gold, maintaining its status as a reserve asset.
Gold ETFs are expected to see sustained inflows, indicating continued interest from institutional and retail investors.
Jewellery demand may recover in early 2025, especially during the wedding season, but price stability will be crucial.
What This Means for Investors:
Gold remains a long-term strategic asset, providing a hedge against inflation, currency fluctuations, and market volatility.
Silver Market: Deficit Continues, Industrial Demand on the Rise
Silver has been in a supply deficit for four consecutive years, with demand consistently outpacing supply.
Industrial demand for silver has reached all-time highs, fueled by:
Manufacturing growth in China
Green technology advancements
Silver remains more volatile than gold, often mirroring Indian equity market fluctuations.
Investment Strategy:
Gold is a stable long-term asset for portfolio diversification.
Silver is better suited for short-term tactical investments, given its higher price swings.
Should You Invest in Gold or Silver in 2025?
Gold remains a solid choice for those looking for wealth preservation and risk diversification.
Silver offers potential growth opportunities but comes with higher volatility.
With central banks increasing their gold reserves and investors continuing to pour money into gold ETFs, the yellow metal remains a strong asset for 2025. However, market trends and price stability will be crucial in determining future investment opportunities.
