Gold Hits Record $4,060 as Silver Approaches 40-Year High; Indian Investors Flock to Precious Metal ETFs

Gold prices climbed to an all-time high this week, crossing $4,060 an ounce, while silver touched nearly $51, its strongest level in more than forty years. The rally came on the back of renewed trade tensions between the United States and China and a powerful short squeeze in London that sent shockwaves through precious metal markets. (Bloomberg)

Simultaneously, platinum and palladium also advanced more than 2%, extending a run that has seen all four major precious metals rise between 50% and 80% this year. The sector has outpaced most commodities, driven by investors looking for stability as global risks resurface. (Investopedia)

But what factors are responsible for this run that these precious metals have been on?

Are Geopolitical Tensions Extending Gold’s Record Run?

The yellow metal has now logged eight straight weeks of gains. Analysts point to a mix of central bank purchases, steady inflows into exchange-traded funds and a softer dollar following US Federal Reserve rate cuts. In early Singapore trade, gold held near $4,028 an ounce after reaching a record $4,060.01.

Geopolitical tensions have added to the momentum. Over the weekend, Beijing urged Washington to stop escalating the tariff dispute after President Donald Trump threatened duties of up to 100% on Chinese imports. The White House later signalled readiness to resume negotiations, easing fears of a fresh trade war.

“It seems just when geopolitical and trade risks were diminishing tailwinds for gold, we’ve got this flare up in US-China tensions,” said Kyle Rodda, an analyst at Capital.com. Despite both sides’ openness to further negotiations, “trade volatility may go silent but it never disappears. That’s a really good thing for gold.” (Mint)

Why Are Traders Flying Silver Across the Atlantic?

Silver’s rise has been even sharper. A lack of freely available supply in London has made the market unusually tight, widening the premium over prices in New York. In some cases, traders have reportedly flown silver bars across the Atlantic to benefit from the price difference, a practice more common with gold shipments. The squeeze has been amplified by worries that silver and other critical minerals could be included in potential US tariffs. The situation has stirred memories of 1980, when silver last set its record high of $52.50 an ounce.

Indian Investors Continue Their Gold Rush

The global rush into precious metals is mirrored in India. Data from the Association of Mutual Funds in India (AMFI) shows that gold and silver exchange-traded funds attracted ₹2,605 crore in September, accounting for 72% of the total ₹3,615 crore of passive fund inflows. (Economic Times)

That shift has come at the expense of equity-focused products. Equity ETFs drew ₹1,010 crore during the month, while index funds recorded no net inflows. The numbers indicate that investors are moving toward safer and more tangible assets amid growing uncertainty.

According to an AMFI spokesperson, retail interest in commodity ETFs has been growing quickly. Many investors now buy ETFs directly on stock exchanges or through systematic plans, drawn by lower costs and real-time pricing.

Passive Funds See Strong Growth

The passive mutual fund segment in India has continued to expand, driven largely by growing interest in ETFs. As of September 2025, the overall assets under management in the industry have crossed ₹12 lakh crore, reflecting steady inflows and rising valuations, particularly in gold and silver ETFs. Analysts say this trend highlights a longer-term shift, with passive investing becoming increasingly popular among both retail and institutional investors. (CNBC TV18)

A Global Shift Toward Safety

The preference for gold and silver extends beyond India. Across major economies, investors are moving capital toward assets that hold value when markets turn unpredictable. Inflation remains high and central banks have maintained a cautious stance, reinforcing the appeal of precious metals as long-term stores of wealth. Gold’s steady climb, supported by institutional buying and fund inflows, highlights that trend. Silver’s surge, meanwhile, shows how quickly investors react when signs of scarcity emerge.

Can There Be a Short-term Pullback?

With gold trading comfortably above $4,000 and silver approaching $51, analysts do not see a sharp pullback in the near term. A combination of trade friction, geopolitical tension and central bank policy is expected to keep demand for safe-haven assets elevated.

For Indian investors, the message is clear. The surge in gold and silver ETFs reflects a move toward stability and capital preservation rather than short-term speculation.

Global markets may shift from one headline to another, but one pattern endures: in times of doubt, gold continues to shine, and silver is reclaiming its place beside it. The question now is whether this rally can continue, or are investors due for a pause?

Sources

Bloomberg
Investopedia
Mint
Economic Times
CNBC TV18