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Motilal Oswal Financial Services Ltd. has released its comprehensive “Commodities Review 2025 & Preview 2026”, highlighting how commodities emerged as the best-performing asset class in 2025, outperforming equities, bonds, and most traditional assets. The report underscores that precious metals—particularly silver and gold—were the primary drivers of performance, supported by policy uncertainty, currency volatility, strong institutional participation, and persistent supply constraints.

2025 Review: Commodities Take the Lead Across Asset Classes

According to the report, 2025 was marked by heightened geopolitical tensions, tariff-related uncertainty, evolving central-bank policies, and sharp currency movements. Against this backdrop, commodities delivered strong absolute and relative returns, with investors increasingly favouring hard assets over traditional financial instruments.

Precious metals significantly outperformed major equity indices and real assets during the year. Domestic silver prices surged by over 170%, while domestic gold prices rose by more than 76%, outperforming benchmarks such as the Nifty and the S&P 500. Rising gold-to-equity ratios through the year reflected sustained investor preference for precious metals even during risk-on phases.

Silver Emerges as the Clear Leader

Within precious metals, silver emerged as the standout performer. The gold–silver ratio declined sharply from around 110 to near 65, signalling faster price discovery and a decisive shift in leadership toward silver. This rally was underpinned by structural supply tightness, with global silver demand exceeding supply for the fifth consecutive year, alongside the second-highest industrial demand on record, driven by solar photovoltaics, electrification, electric vehicles, grid infrastructure, and emerging technology applications.

Gold Reinforced as a Strategic Portfolio Asset

Gold continued to strengthen its position as a strategic portfolio hedge in 2025. Central banks purchased more than 1,000 tonnes of gold annually, reinforcing long-term price support and accelerating the shift toward de-dollarisation. Renewed ETF inflows in the second half of the year, combined with a weaker dollar index and rupee depreciation, further amplified domestic gold returns.

 Mr. Manav Modi, Analyst – Commodities, Motilal Oswal Financial Services Ltd., said:
“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.”

Financialisation and Currency Dynamics Add Momentum

The report notes that financial participation played a critical role in reinforcing commodity price trends during 2025. Domestic gold and silver ETF assets under management increased by more than 150%, while global ETF flows turned decisively positive in the latter half of the year. Currency movements added further support, with a weaker dollar index and a depreciating rupee enhancing domestic commodity returns.

Base Metals and Energy: Diverging Trends

Base metals delivered selective gains in 2025. Copper outperformed on the back of supply constraints, electrification trends, and investor interest, while aluminium posted steady gains supported by consumption from automotive, construction, and electrical sectors. Zinc remained relatively range-bound amid surplus conditions, despite periods of tight inventories.

Energy markets, particularly crude oil, underperformed during the year as supply growth consistently outpaced demand. Aggressive OPEC+ supply additions, elevated inventories, and muted global consumption kept prices under pressure, with geopolitical risks contributing to volatility rather than sustained direction. Natural gas markets experienced sharp, weather-driven price swings, reflecting shifting demand expectations rather than structural shortages.

Mr. Navneet Damani, Head of Research – Commodities, Motilal Oswal Financial Services Ltd., said:
“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.”

Preview 2026: Risk, Reality and Returns

Looking ahead, the report highlights that 2026 is likely to be a year of transition rather than disruption, building on the structural themes that enabled commodities to outperform in 2025. Policy shifts, currency movements, and geopolitical developments are expected to introduce volatility, but also create differentiated opportunities across

commodity segments.

Gold and silver are expected to retain their strategic relevance in early 2026, supported by continued central-bank and investor demand, limited mine supply growth, and relatively inelastic scrap flows. Physical market tightness is therefore expected to persist, reinforcing precious metals as long-term portfolio anchors. Base metals may see phases of consolidation, offering selective medium-term opportunities, while energy markets are expected to remain sensitive to supply-demand adjustments.

Commenting on the Preview 2026, Mr. Navneet Damani and Mr. Manav Modi, Motilal Oswal Financial Services Ltd., 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 in an increasingly fragmented global macro environment.”

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