Gold and silver vs NIFTY50: How precious metals have outshone Indian equities over the past year

The National Stock Exchange (NSE) benchmark index NIFTY50 has underperformed precious metals like gold and silver over the last 12 months. Safe-haven demand, global uncertainties and central bank buying have powered a historic rally in gold and silver. While equities have entered a phase of consolidation after a record-breaking run last year, gold and silver have handsomely rewarded investors.

Equities struggle to reclaim record highs

The NIFTY50 index, which hit an all-time high of 26,277 in September last year, has been unable to break above that level for more than a year now. The index remains nearly 5% below its all-time high, data from NSE showed. The subdued performance by NIFTY reflects poor investor sentiment amid foreign outflows, global headwinds and stretched valuations, analysts noted.

Similarly, the SENSEX is down 4.71% from its record high of 85,978.25, marking a clear pause after a four-year bull run that saw the NIFTY50 surge more than 3.5 times from its March 2020 lows it had fallen to during the pandemic.

Foreign institutional investors (FIIs) have pulled out a record ₹2.42 lakh crore since October 2024, the steepest bout of selling on record, according to NSDL data. Elevated valuations, tighter derivatives regulations, disappointing earnings, and global uncertainties have weighed on sentiment for equities.

Gold prices soar to record levels

In contrast, gold has delivered spectacular returns. According to the NSE’s Market Pulse report, gold prices are up 37% in the past 12 months and 31% year-to-date, comfortably beating equity benchmarks.

On Wednesday, domestic gold futures for December delivery surged ₹1,109 (0.91%) to hit a record high of ₹1,22,220 per 10 grams on the Multi Commodity Exchange (MCX). The February 2026 contract also climbed ₹1,085 to touch a lifetime high of ₹1,23,469 per 10 grams — marking the ninth straight session of gains.

In the international market, Comex gold futures for December delivery hit a new high of $4,051.55 per ounce, up over 1%, reflecting strong global momentum.

Silver too has outperformed equities. On MCX, silver futures for December delivery jumped ₹2,387 (1.63%) to a record high of ₹1,48,179 per kilogram, while the March 2026 contract surged to ₹1,50,000 per kg.

Globally, Comex silver futures for December gained nearly 2% to hit $48.61 per ounce — their highest in years — supported by both safe-haven demand and industrial use expectations.

US political deadlock and dovish Fed outlook

Gold prices spiked after reports of a looming US government shutdown, as negotiations between President Donald Trump and Democrats stalled. This, coupled with expectations of prolonged low interest rates, boosted the appeal of non-yielding assets like gold.

SPDR Gold Trust—the world’s largest gold-backed ETF—saw its holdings rise 0.60% to 1,011.73 tonnes, their highest since July 2022, signalling strong investor appetite.

Geopolitical tensions fuel safe-haven rush

Heightened geopolitical risks—from the Russia-Ukraine war and Israel-Hamas conflict to trade frictions involving the US—have created a climate of uncertainty boosting gold’s demand. Traditionally viewed as a hedge against political turmoil, gold has benefited immensely.

Central banks keep accumulating gold

Central banks globally continue to buy gold aggressively. According to the World Gold Council, central banks added a net 20 tonnes of gold in May alone and have accumulated over 1,000 tonnes annually for three consecutive years, compared with 400–500 tonnes a year in the previous decade.

Countries across Asia, the Middle East and Europe are boosting gold reserves to hedge against currency volatility and dollar weakness. The Reserve Bank of India too has been steadily increasing its gold holdings.

Rupee weakness and festive demand in India

The recent depreciation of the Indian rupee has made gold imports more expensive, pushing domestic prices higher. At the same time, the onset of the festive and wedding season — traditionally the strongest period for gold demand — has added fuel to the rally.

Despite record prices, jewellers are reporting strong advance bookings amid the festive season rush. Retail demand remains resilient, underscoring gold’s cultural significance in India.

Why Indian equities are consolidating

While gold and silver rally, Indian equities are in a phase of consolidation. Foreign ownership of Indian stocks has fallen to 16%—the lowest since 2019—from 22% earlier, as per Jefferies. India has underperformed the MSCI Emerging Markets index by 30 percentage points over the past year, its worst relative showing since 1996.

Global factors such as US tariffs on Indian exports, geopolitical tensions, and tighter liquidity have dampened the enthusiasm of foreign investors, analysts said. However, robust domestic inflows—with SIP contributions nearing $3 billion per month and demat accounts swelling from 3.6 crore in March 2020 to 18 crore by mid-2024—have cushioned the market from a deeper correction, analysts noted.

Strategists see this as a structural pause, not the end of the bull market. Christopher Wood of Jefferies frames the current trend as “a healthy consolidation”, with upcoming equity supply worth $50–70 billion likely to keep indices range-bound in the near term.