As 2024 draws to a close, investors are grappling with a volatile market environment shaped by global conflicts such as the Ukraine-Russia and Iran-Israel wars, weak corporate earnings, and persistent inflation. These factors have led to a year marked by risk aversion, with safe-haven assets like gold and silver outperforming riskier investments. As of December 25, 2024, gold surged by 25.25%, while silver rose by 23.11%. In contrast, major equity indices like the BSE Sensex and NSE Nifty50 have seen a more modest gain of around 9%.
Looking ahead to 2025, analysts suggest a shift in investment strategies, with a greater focus on gold and silver to generate better returns. For investors with a moderate risk appetite, an ideal portfolio would consist of 50% in large-cap equities, 35% in gold, and 25% in fixed-income assets. Experts recommend a cautious yet strategic approach to investing in 2025, considering the ongoing global uncertainties.
Gold’s Strong Performance and Outlook for 2025
Gold has been a standout performer in 2024, driven by global economic instability and increasing demand from central banks. Reports indicate that central banks collectively accumulated over 500 tonnes of gold this year. In India, assets in gold and silver ETFs surpassed Rs 30,000 crore and Rs 7,500 crore, respectively, bolstered by the Union Budget 2024’s reduction of import duties on these metals.
The price of gold has risen significantly, moving from $2,091 per ounce at the end of 2023 to over $2,600 per ounce by December 2024. It reached a record high of $2,826.30 per ounce in October. According to the World Gold Council, gold is on track for its best annual performance in over a decade. However, the outlook for 2025 suggests more modest growth, unless driven by stronger-than-expected central bank demand or significant financial market disruptions.
Silver, too, is expected to see continued upward momentum in 2025, supported by higher industrial demand and a strained supply chain. Analysts predict that silver prices could find support around Rs 85,000–86,000 per kilogram domestically, with potential targets of Rs 1,11,111 to Rs 1,25,000, and $38.55 to $43 on the Comex. Commodity experts recommend buying on dips, but note that any reversal in monetary policy leading to higher interest rates could pose challenges for both gold and silver.
Equity Investment: Large-Cap Stocks in Focus
Despite the volatility, equities remain a long-term wealth-generating asset class. Analysts advise focusing on large-cap stocks in 2025, with a preference for sectors such as IT, pharmaceuticals, textiles, and select consumer stocks. Gaurav Dua, head of capital market strategy at Mirae Asset Sharekhan, believes large-caps will outperform small and mid-caps due to sector rotation, offering better returns.
Vinod Nair, head of research at Geojit Financial Services, shares this outlook, emphasizing that a multi-asset strategy should tilt towards large-caps in the short to medium term. He notes the premium valuations in the broader market and the peak premiumization of mid-cap stocks.
Debt Investment: A Safe Bet in Fixed-Income Assets
For those looking to invest in fixed-income assets, analysts suggest focusing on debt securities with a 3-4 year tenure. Mirae Asset Sharekhan’s Dua points out that the Reserve Bank of India’s (RBI) rate cuts are likely to pull down the yield curve, making it an ideal time for debt investments in the near term.
Conclusion
As we enter 2025, investors are advised to carefully balance their portfolios between equities, gold, and fixed-income assets. Gold and silver are expected to continue their strong performance amid global uncertainty, while large-cap stocks offer a promising long-term investment. Debt securities provide a safer, more stable option, particularly in light of expected interest rate cuts. By diversifying across these asset classes, investors can position themselves for a year of potential growth and stability in an unpredictable global economic landscape.
Related topics：
- Key Market Ratios and Momentum Trends for Gold
- Gold and Silver Prices in India: December 24, 2024 Update
