Commodities outperformed all major asset classes in 2025, driven primarily by record gains in precious metals, according to a new report by Motilal Oswal Financial Services Ltd (MOFSL). The firm’s “Commodities Review 2025 & Preview 2026” states silver and gold led the rally, supported by policy uncertainty, currency volatility and structural supply tightness.
The report attributes the asset class’s strong performance to a backdrop of geopolitical tensions, tariff-related uncertainty and sharp currency movements, which increased investor preference for hard assets. Domestic silver prices surged by over 170 per cent during the year, while domestic gold prices rose by more than 76 per cent, outperforming major equity indices like the Nifty and the S&P 500.
Silver And Gold: The Standout Performers
Silver emerged as the clear leader, with the gold-to-silver ratio declining sharply. “The performance of precious metals in 2025 reflects a clear shift in investor behaviour. Gold has evolved beyond a cyclical hedge into a strategic reserve asset, supported by sustained central-bank buying, currency volatility, and persistent macro uncertainty,” said Manav Modi, analyst, Commodities, Motilal Oswal Financial Services.
The rally was underpinned by a fifth consecutive year of global silver demand exceeding supply, coupled with the second-highest industrial demand on record from sectors like solar photovoltaics and electric vehicles. Gold was reinforced by central banks purchasing more than 1,000 tonnes annually, accelerating de-dollarisation trends. Financial participation also played a critical role, with domestic gold and silver exchange-traded fund assets under management increasing by more than 150 per cent.
Diverging Trends In Base Metals And Energy
The report noted divergent trends in other commodity segments. Base metals like copper outperformed due to supply constraints and electrification demand, while aluminium posted steady gains. Zinc remained range-bound amid surplus conditions. In contrast, energy markets underperformed as crude oil supply growth outpaced demand, keeping prices under pressure despite geopolitical volatility. Natural gas experienced sharp, weather-driven price swings.
“While base metals and energy markets reflected divergent fundamentals in 2025, structural demand drivers—particularly electrification and infrastructure—continue to underpin select metals, creating opportunities during periods of consolidation,” said Navneet Damani, head of research, Commodities, Motilal Oswal Financial Services.
2026 Outlook: Transition And Strategic Allocation
Looking ahead, the report suggests 2026 will be a year of transition rather than disruption, building on established structural themes. Precious metals are expected to retain strategic relevance due to continued institutional demand and physical market tightness. Base metals may see consolidation phases, while energy markets will remain sensitive to supply-demand adjustments.
In a joint comment on the outlook, Damani and Modi said, “As we move into 2026, commodities are transitioning from momentum-driven trades to strategically allocated assets. While volatility is likely to remain a feature of the market, structural demand, currency dynamics, and policy uncertainty continue to reinforce the role of commodities—particularly precious metals—as core portfolio hedges.”