1. US Federal Reserve Policy 

Expectations of further interest rate cuts by the Fed this year have lowered real yields,  reducing the opportunity cost of holding non-yielding assets like gold. Investors  increasingly view gold as a safe- haven amid a softer monetary environment. 

2. Inflation and Currency Dynamics 

Persistent global inflation, particularly in the US and Europe, coupled with a weakening  dollar at times, has strengthened gold’s appeal as an inflation hedge. With the US Dollar  Index volatile, international investors have turned to gold to preserve purchasing power. 

3. Geopolitical Risks 

Heightened global tensions — including Middle East conflicts and East Asia tensions — have reinforced gold’s safe-haven status. Political uncertainty drives both institutional  and retail demand, fueling upward price pressure. 

4. Trump Tariff Uncertainty 

Trade policy unpredictability and tariff discussions from the Trump administration have  disrupted markets and created concern over global trade flows. This uncertainty has  encouraged investors to allocate more to gold as a hedge against potential economic  slowdowns and market volatility. 

5. US Government Shutdown 

The October 2025 US government shutdown triggered short-term risk aversion in global  markets, prompting large inflows into precious metals. Investors sought stability in gold  amid liquidity and fiscal concerns. 

6. Strong Investment Demand 

Global inflows into gold ETFs, sovereign wealth funds, and retail accumulation in India  and China have surged, sustaining momentum. Seasonal buying, particularly for Diwali  and other festive periods, also supported prices.

7. Central Bank Buying 

Central banks across the world, particularly in Asia and the Middle East, have  significantly increased gold purchases. Strategic accumulation by central banks,  including those in India, China, and Russia, signalled confidence in gold as a reserve  asset, further tightening the market and providing strong support to prices. 

8. Other safe-haven assets underperformance 

The dollar, for many, many years, has been seen as the haven of the market because  people trust the US government, and they trust dollar assets. 

Welcome to 2025. The dollar – it’s the single biggest decline in six months in 50 years. Gold is at record highs. That discrepancy reflects what’s called The Debasement Trade”. It is the idea that faith and trust in the dollar is no longer what it once was, so you have  investors looking at other assets. The dollar continues to face headwinds of a stretched  valuation and unsustainable U.S. fiscal outlook.  

People do that trade when they are losing confidence in traditional government bonds  and fiat currencies. This likely reflects the challenging fiscal outlook for traditional safe haven currencies like the Japanese yen and euro, as seen in France’s budget issues and  concerns about the next leader of Japan’s ruling Liberal Democratic Party. As investors  question the idea of U.S. exceptionalism and U.S. policymaking, support for the dollar  has weakened. 

And in that situation, gold becomes quite appealing because there is no counterparty. It’s just you and your gold. It’s independent from the government’s influence as well, which is no longer something investors automatically say bout the dollar or the US  Central Bank. 

9. FED independence is increasingly at risk 

In 2025, perceptions of Trump interfering with the Federal Reserve’s policy decisions have shaken confidence in the Fed’s independence. Markets fear that interest rates may  not reflect economic fundamentals but political pressures instead. This uncertainty  increases the appeal of gold as a safe-haven asset, pushing prices higher. Investors worry  that a less independent Fed could lead to unpredictable monetary policy, higher 

inflation, or currency volatility. Consequently, gold surged as a hedge against these risks,  with both retail and institutional investors seeking protection, driving record-high prices  globally and in India. 

10. Technical and Momentum Factors: 

The parabolic rise in early 2025 triggered trend-following inflows, amplifying the rally.  Breakouts above psychological levels like $3000 and $4000 created further momentum,  attracting speculators. 

Silver’s extraordinary rally from $29.30 (~Rs 87300) in January 2025 to $53.76(~Rs  170,400) in October 2025 — a surge of over 75% — reflects a powerful blend of industrial demand revival, structural supply shortages, and monetary tailwinds. 

Top 5 reasons for Silver’s 75% bull run in 2025 

1. Industrial Demand Boom – Especially Solar and Green Energy: 

Silver’s dual identity as both a precious and industrial metal was a key driver. The global green energy transition, led by record installations of solar photovoltaic (PV) capacity in  China, India, and the U.S., caused unprecedented silver consumption. PV sector demand  in 2025 alone exceeded 200 million ounces, according to the Silver Institute. Rising use  of silver in EV components, 5G electronics, and battery technologies added further  pressure on supplies. 

2. Multi-Year Supply Deficit: 

The global silver market entered its fifth consecutive deficit year in 2025, with supply  trailing demand by an estimated 150 million ounces. Mining output from Latin America  and China remained constrained due to lower ore grades and environmental  restrictions, while recycling flows failed to rise meaningfully despite higher prices. This  tightening physical balance led to visible inventory depletion in LBMA and COMEX vaults,  triggering backwardation — a clear sign of scarcity. 

3. Precious Metal Correlation and Investment Flows: 

As gold soared past $4,000 amid U.S. fiscal concerns and Fed rate cuts, silver followed  suit, magnifying gains due to its higher volatility and lower base price. Investor demand  through ETFs and physical bars has intensified as silver tracks gold’s record rally. Supply 

bottlenecks, logistics delays, and speculative buying have magnified the shortage,  creating one of the tightest silver markets seen in over a decade. Investment demand  through ETFs, futures, and digital silver platforms spiked, with many traders viewing  silver as “gold with leverage.” 

4. Inflation Hedge and De-Dollarisation Themes: 

Silver has strongly benefited from both inflation hedge and de-dollarisation themes in  2025. As inflation remains sticky across major economies and real interest rates turn  negative, investors have sought tangible assets like silver to preserve purchasing power.  Silver’s dual nature—as both an industrial metal and a store of value—has amplified its  appeal amid global currency debasement fears. Simultaneously, the de-dollarisation  trend, led by central banks and emerging markets diversifying away from U.S. assets, has  increased institutional allocations to precious metals, including silver. This shift has  tightened global supplies and reinforced silver’s role as a strategic hedge against monetary instability. 

5. Speculative and Momentum Buying: 

Strong technical breakouts above $35 and $40 attracted hedge fund inflows and retail  participation, reinforcing the rally. The sharp rally in gold and industrial metals triggered  algorithmic and momentum-driven flows into silver futures and ETFs. Retail investors,  influenced by social media narratives of a potential “silver squeeze,” also joined the  rush, amplifying price moves. As volatility rose, leveraged traders sought short-term  gains, further accelerating the uptrend. This self-reinforcing cycle of rising prices,  inflows, and short-covering pushed silver far beyond fundamental valuations,  transforming it into one of the most actively traded commodities of the year. 

Should you buy Gold and Silver on Dhanteras and Diwali 2025? 

As families perform Laxmi Pooja on Dhanteras and Diwali, praying for prosperity, the  case for including gold in your portfolio remains compelling. Over the past two decades,  gold has consistently outperformed many asset classes, delivering a 15% compounded  annual return for Indian investors. Its resilience during crises—be it the global financial  crunch, pandemic uncertainty, or geopolitical turmoil—makes it a compelling choice to  complement equities without volatility to the portfolio.

Source: WGC, Nifty 50 TRI, Domestic Gold as on 30 Sep, 2025 

So when you are thinking of investing in Gold and Silver, think of long term, say 3 years,  5 years and 10 years. As prices are elevated now, we could see short-term correction  and profit booking, but in the long term, it’s definitely going to create wealth in the  portfolio. As this uncertain environment continues, gold and silver will outperform other  asset classes going forward. 

The idea is to allocate at least 15-20% of the portfolio in Gold and Silver for a higher  risk-adjusted return. If your portfolio is underallocated, increase the allocation starting  this Dhanteras/Diwali. 

The strategy for investing is in a staggered manner, this Dhanteras/Diwali.  1) 25% investment – at current prices – around Rs 127,000/10 gm in Gold and Rs  156,000/kg in Silver as an auspicious token on Dhanteras and Diwali 2) 25% investment when prices are corrected by 5% – Rs 121,000/10 gm in Gold  and Rs 148,000/kg in Silver. 

3) 25% investment when prices are corrected by 10% – Rs 115,000/10 gm in Gold  and Rs 140,000/kg in Silver. 

4) 25% investment when prices are corrected by 15% – Rs 108,000/10 gm in Gold  and Rs 132,000/kg in Silver.

Next target for Gold is $5000 (~Rs 150,000) and Silver is $60 (Rs 200,000). If someone  follows this strategy of Gold and Silver Investment through any medium – Digital Gold/Digital Silver, Gold ETF/Silver ETF or physical bar/coin, it will lead to at least 20- 30% return Diwali 2026. You never know, if this bull run continues, prices might double  in the next 5 years too.