Gold vs silver vs Sensex: Precious metals outshine equities this year — Will the script change in 2026?

The year 2025 clearly belonged to commodities. Gold and silver sparkled with their best bull run since 1979, while Indian equities found themselves on the back foot, unable to put up a convincing show.

In the domestic spot market, gold prices have rallied a whopping 80% in a year. Its poorer cousin silver has rather outshone the yellow metal with a massive 150% surge. Against such a performance, Sensex's near 9% gain seems minuscule, clearly reflecting the investor preference for the precious metals this year.

What drove gold and silver outperformance this year?

A confluence of factors emerged as the tailwinds to the gold and silver price rally this year. The first and foremost has been the uncertain global environment. As US President Donald Trump imposed tariffs worldwide, investors sought safe-haven assets to protect themselves against trade war-related worries.

Moreover, the geopolitical environment also remained strained as Middle East tensions flared up, the India-Pakistan conflict resurfaced, and the resolution to the Ukraine-Russia crisis remained elusive.

The sentiment was further aided by central bank easing, especially the US Federal Reserve. A lower interest rate regime raises the appeal of non-interest-yielding assets like gold and silver. Moreover, the dollar index has come under pressure, making bullion more attractive for buyers of other currencies.

Central bank buying, supply constraint worries and silver's growing demand amid industrial push have been other key drivers behind gold and silver's rise.

What kept Indian stock market on tenterhooks?

While it's true that commodities and equities have an inverse relationship, the Indian stock market has suffered at a time when most global markets are scaling record highs and delivering high double-digit gains.

The major factor that has driven safe-haven buying — Trump tariffs — has also deeply hurt Indian equities, resulting in underperformance not just versus bullion but also other major markets.

Donald Trump has slapped steep 50% tariffs on India. The trade deal between the two countries is facing its own challenges, and in turn, this has pressurised the Indian rupee and driven FIIs away. FIIs have been net sellers of Indian stocks worth ₹156,852 crore in 2025 — the worst year on record.

But can gold and silver continue to shine?

Most analysts believe gold and silver's bull run will continue in 2026 as most factors remain conducive. Goldman Sachs expects gold to hit $4900 level in 2026. Meanwhile, predictions for silver have risen to as high as $100 in the next three years.

Currently, gold prices are at $4500 in the international market, and silver is around $71.

The outlook for the Indian stock market also remains robust, with analysts predicting Nifty hitting 29,000-30,000 by December next year. Meanwhile, Morgan Stanley, in its bull-case scenario, has predicted Sensex reaching 107,000 by 2026-end.

Kranthi Bathini of Wealthmills Securities told Mint that equities look very attractive at this point. "Commodities will be entering a period of consolidation in the coming quarters. The geopolitical issues and global politics, however, will be key triggers for the precious metals rally going ahead. By and large, equities look attractive at this point versus other asset classes," he opined.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.