Metals have been on a roll this year. Led by a rally in gold and silver, other metals such as copper and aluminium have also remained at elevated levels, with forecasts for 2026 suggesting that the rally in metals still has considerable steam.
Amongst the heroes of 2025, gold and silver would clearly win the crown. Both precious metals continued to shine in 2025. After delivering a sterling return of a little over 30 per cent in 2024, gold continued its rally in 2025. To date, it has delivered a return of 73 per cent, with a few days still to go in the year. At present, it is priced at Rs12,473 per gram.
Silver, which dazzled with a 40 per cent return in 2024, surpassed this with a nearly 130 per cent rise in 2025. From Rs90,500 per kg on the MCX in January 2025, it rose to over Rs2.09 lakh on 20 December.
While the factors differed, the reasons were largely the same as those prevailing in 2024. Central banks aggressively purchased gold throughout the year in a bid to diversify their asset base away from US dollar bonds. Geopolitics, political uncertainty, tariff tantrums, and finally retail investors entering the market due to poor equity returns all played a role.
In 2024, central banks purchased an estimated 500 tonnes of gold. In the first 10 months of 2025, central banks purchased a little under 700 tonnes, with estimates suggesting this could rise to 1,000 tonnes by year-end, as diversification away from the US dollar gained momentum. The central banks of Brazil, Poland (82.7 tonnes till date, the highest purchaser), and Kazakhstan were the biggest buyers, as per the World Gold Council. India and China were also shoring up gold as part of a move to de-dollarise and possibly create a multipolar monetary system.
Amundi Investment Institute, in its October report, captured this succinctly, stating: “The recent rally is the beginning of a gradual transition from a US-centric international monetary system to a multipolar system.” Many sovereign funds have also been buying gold and gold ETFs.
It will be interesting to see the gold reserves declared by central banks at the end of December 2025. The World Gold Council has unofficially estimated unsatiated demand for gold at nearly 66 per cent, suggesting further upward movement in 2026 and beyond. Amundi has forecast gold prices touching $5,000 an ounce by 2028. JP Morgan is more bullish and expects this level to be reached by the last quarter of 2026, with ‘$6,000 per ounce a longer-term possibility’.
A December report estimates that around 755 tonnes of central bank purchases are expected in 2026: lower than the peak levels of over 1,000 tonnes seen in recent years, but still elevated compared with pre-2022 averages of 400-500 tonnes. Central banks are estimated to hold around one-fifth of their reserves in gold.
Silver dazzles
Like gold, silver has also begun attracting central bank attention. Since 2024-25, central banks have been reassessing diversification into silver to build more balanced portfolios. Russia, after seeing its financial assets frozen, emerged as a major buyer of silver.
Apart from renewed investment demand from investors and central banks, industrial demand for silver is also soaring due to its increasing use in electric vehicles, green power generation, semiconductors, and the AI boom. On the supply side, production has failed to keep pace with the exponential growth in demand. In addition, several incorrect calls by major investment banks, which had built short positions, contributed to the rally as they were forced to cover losses at elevated prices.
The largest buyers of silver are US investors. Indians are the second-largest investors, followed by investors in Germany, China, and Canada.
Many believe there is still significant momentum left in the rally. Despite prices more than doubling in 2025, several investment banks expect the trend to continue. Motilal Oswal has predicted a price of Rs2.40 lakh per kg by the end of 2026, arguing that silver will act as a good portfolio stabiliser in an environment of currency weakness.
Copper prices remained elevated in 2025, posting gains of nearly 36 per cent, with prices touching $11,800 per tonne in December. Demand remained strong from electric vehicles, AI, and alternative power sectors, with the US and China being major buyers. Prices could have been even higher but for subdued demand from China’s property sector.
Supply-side concerns remain more worrying, with a current global shortage of around 160,000 tonnes, which could increase by another 25 per cent in 2026, potentially pushing prices to $12,000 per tonne. Supplies have been disrupted by major accidents at mines in Chile and Indonesia, two leading copper-producing countries.
One of the largest mines, El Teniente in Chile, owned by Codelco, suffered a major accident a few months ago, resulting in an estimated supply disruption of 48,000 tonnes. Production disruptions were also seen at other mines. Freeport-McMoRan’s Indonesian Grasberg mine was impacted by a mudslide in September, resulting in the deaths of seven miners. This mine accounts for nearly 70 per cent of Freeport-McMoRan’s production, and the company expects a nearly 36 per cent decline in output in 2025. This demand-supply mismatch has driven copper prices sharply higher.
JP Morgan, Goldman Sachs, and UBS have raised their forecasts for 2026. JP Morgan expects copper prices to reach $12,500 in the first half of 2026, while UBS has set a target of $13,000 by December 2026.
In India, apart from Hindustan Copper, there are no major raw copper producers. Hindustan Copper’s share price rose from R183 in April to a 52-week high of R391. Other major players, including Hindalco, Vedanta, and Adani, depend on imported copper.
Birla Copper, housed within Hindalco, operates a refinery at Dahej with a capacity of 0.5 million tonnes, recycling copper scrap and LME-grade cathodes to produce 99.9 per cent continuous cast copper rods, speciality rods, and wires. The company is expanding capacity by another 0.3 million tonnes and also has a capacity of 2.25 lakh tonnes for cast and rolled copper rods in Gujarat. It is among the top three copper rod producers globally.
Adani has taken up the Kutch Copper project and has tied up with an Australian company for raw copper supply. Hindustan Copper also supplies part of its output to Hindalco.
Vedanta remains a major player in copper through Sterlite Copper, which operates a 4 lakh tonnes per annum smelter with an associated refinery and copper rod plant at Thoothukudi, Tamil Nadu, along with a 160 MW coal-based power plant.
In November, Vedanta incorporated a US-based entity, CopperTech Metals Inc, to own and operate the Konkola Copper Mines in Zambia. Vedanta Resources has already invested $3 billion in the project and plans to invest another $1.5 billion to develop mine shafts, smelters, concentrators, and associated infrastructure.
Given the strong growth potential for electric vehicles and AI data centres in India, copper demand is expected to rise further amid limited supplies.
Aluminium stays firm
Aluminium remained firm in 2025 and is expected to stay elevated until the first quarter of 2026. Prices on the London Metal Exchange rose from around $2,500 per tonne to just under $2,900 per tonne, reflecting a gain of nearly 16 per cent during the year. On the MCX, prices also remained firm.
Global supply constraints failed to meet rising demand, even as inventories were drawn down. A disruption at Iceland’s smelter – Europe’s second-largest supplier – added to supply pressures. Europe also bolstered supplies ahead of the Carbon Border Adjustment Mechanism (CBAM), which will apply from 1 January 2027, prompting restocking during the 2023-25 transition period.
Another concern is Mozambique, a major aluminium exporter. Output could be impacted from March 2026 as the Mozal Aluminium Smelter faces uncertainty over long-term power supply from Eskom in South Africa. Without a new agreement, the plant may be placed under care and maintenance, reducing global output.
In India, major aluminium producers include National Aluminium Company, Hindalco Industries, and Vedanta. Hindalco Industries, with a market capitalisation of R1.91 lakh crore, is a fully integrated producer and, through its subsidiary Novelis, operates across downstream products. Its share price rose from around R600 in January to R850, a gain of 31 per cent.
Nalco’s share price also rose by 31 per cent, while Vedanta gained 21 per cent. Vedanta is planning to demerge its businesses into separate commodity-focused entities.
Steel: Growth in India, but global challenges remain
India, the world’s second-largest steel producer, was the only country to register double-digit growth in the first 10 months of the year, with total production of 136 million tonnes. China, Japan, and Russia all recorded declines, while US production rose by 2.8 per cent to 68 million tonnes. China’s output of 818 million tonnes remains more than double that of the next nine producers combined.
Global steel production is expected to rise by just 1 per cent in 2026, following 3 years of decline between 2022 and 2024. While 2025 is expected to remain flat overall, India and ASEAN countries are projected to grow, even as demand slows elsewhere.
Adding to industry challenges is the addition of new capacity. The OECD Steel Committee notes that global steel excess capacity is increasing at its fastest pace since the 2009 financial crisis and could exceed 680 million metric tonnes by the end of 2025. Most new projects are concentrated in Asia, with concerns over capacity expansion in China and overseas investments by Chinese steelmakers in ASEAN and Africa.
On the trade front, India has reduced steel imports through anti-dumping duties on cold-rolled steel from China and hot-rolled coils from Vietnam, imposed for 5 years each.
With surplus capacity and production outpacing demand, pricing pressures are expected to remain. A revival in China’s property market or an end to the Russia–Ukraine war could provide a boost through reconstruction demand. Companies with production bases in Europe, such as ArcelorMittal and Tata Steel Europe, could be key beneficiaries, as steel for reconstruction may be sourced from the EU rather than the US.