Gold and silver outlook: Why strategic investment could pay off, says Tata Mutual Fund

Investors looking to diversify their portfolios may find gold and silver attractive, according to the latest insights from Tata Mutual Fund. Both precious metals have shown gains this year, supported by global economic uncertainty, central bank activity, and US Federal Reserve (Fed) rate cuts.

Gold has historically performed strongly during periods of economic turbulence. For instance, during the 2008 financial crisis, gold prices doubled between January 2008 and August 2011.

Similarly, the Covid-19 pandemic saw gold rise 53% in early 2020.

This year, gold has again reached all-time highs, driven by several factors:

• Central bank purchases: Central banks worldwide have nearly doubled their gold reserves over the past decade, with India’s reserves also steadily increasing.


• US Fed rate cuts: The 25-basis point rate cut in September 2025 led to a rally in gold. Further cuts are expected, which typically weaken the dollar and boost gold prices.


• Geopolitical uncertainty: Ongoing tensions, including the Russia–Ukraine conflict and unrest in the Middle East, have fueled demand for safe-haven assets.


• Rupee depreciation: With over 85% of India’s gold imported, a weaker rupee amplifies local demand and returns.

Tata Mutual Fund expects gold to consolidate in the $3,500–$4,000/oz range in the short term.

Investors may consider using market dips to accumulate gold as a long-term hedge against inflation, currency depreciation, and geopolitical risks.

Silver: A strong complement to gold

Silver has experienced an even more remarkable run this year, rising nearly 61% from $28.92 per ounce in January to over $46 by September.

Unlike gold, a significant portion of silver demand—around 60%—comes from industrial usage, particularly in electronics and green technologies.

Key drivers include:

• Industrial demand: Recovery expectations in China and robust global industrial activity have fueled silver prices.


• Fed rate cuts and dollar depreciation: Similar to gold, lower US interest rates support silver’s rally.


• Supply deficit: The global silver market is expected to remain in deficit for a fifth consecutive year, enhancing price momentum.


• Rupee weakness: With India importing about 92% of its silver demand, a weaker rupee amplifies domestic returns.

Gold-silver ratio: The ratio has slipped from 85 to around 81, signaling silver’s potential outperformance relative to gold in the coming months.

Tata Mutual Fund suggests a balanced approach for investors: a 50:50 allocation between gold and silver could harness silver’s industrial growth story while maintaining gold’s strategic safe-haven appeal.

Long-term perspective

Over the past 30 years, gold has delivered average annual returns of 7.6% in dollar terms (11% in rupee accounting for rupee depreciation), while silver returned 6.4% in dollar (9.8% in rupee).

Both metals remain long-term wealth preservers, with silver offering potential for higher relative gains in the medium term due to industrial demand recovery and a persistent supply deficit.