Gold and silver returns in 2026: Key growth drivers and right allocation strategy for long-term investors

Gold may have regained ground after a recent correction, but Tata Mutual Fund is advising investors to avoid chasing short-term moves in precious metals. Its August 2026 house view remains “bullish in the long term”, with a preference for “staggered investment” rather than lump-sum buying.

For investors looking to add precious metals to their portfolios, Tata MF prefers gold as the core allocation, while silver can complement it because of its industrial-demand potential.

How did gold and silver perform till July?

The study shows gold holding up better than silver in July 2026. International gold gained 0.95%, while domestic gold declined 0.72%. International silver fell 1.71%, while domestic silver declined 4.34% during the month.

On a year-to-date basis, the chart shows international gold up 1.06% and domestic gold up 12.45%, while international silver was down 9.42% and domestic silver was down 0.25%.

Tata MF mentioned that domestic gold outperformed international gold due to rupee depreciation and higher import duties.

“Silver underperformed gold as its industrial-demand exposure made it more vulnerable to war-driven cost pressure and rate-hike risk, even though its structural supply deficit widened further,” the study mentioned.

Why does Tata MF remain positive on gold?

The fund house expects gold to remain supported by structural factors even as short-term volatility continues. Interest-rate expectations, the US dollar, bond yields and geopolitical developments could keep prices “range-bound” in the near term.

Over the medium to long term, continued central-bank purchases, investment demand and the need for portfolio diversification remain key supports.

Gold also acts as a hedge against “macroeconomic uncertainty” and “currency debasement risks”. Therefore, investors could use market weakness to gradually build their strategic gold allocation.

Are central banks becoming more important for gold?

Yes. Tata MF highlights a structural shift from ETF-driven demand towards central-bank buying. Even during heavy ETF outflows in 2022-23, strong central-bank purchases helped create a “structural demand floor” for gold. ETF inflows recovered in 2025, while central-bank buying remained strong.

According to the World Gold Council data cited in the study, official-sector gold purchases reached 289 tonnes in Q2 2026, the strongest second-quarter buying on record, taking first-half purchases to 345 tonnes. Global gold ETF flows have also shown “early signs of stabilization” since July 2026.

Is silver a better investment than gold?

Tata MF sees a compelling long-term case for silver, but its view does not suggest replacing gold with silver.

The gold-silver ratio rose from around 51 in May to about 70 in July, highlighting the market’s preference for gold over silver. A higher gold-silver ratio means it takes more units of silver to buy the same amount of gold.

“Investors viewed gold as a defensive asset, while silver’s industrial-demand profile left it more exposed to growth and interest-rate concerns,” the study noted.

Silver’s longer-term case comes from its industrial uses in electronics, AI-related hardware, renewable energy and solar applications. Tata MF noted 2026 could be the “sixth consecutive year of silver deficits”, with demand exceeding supply.

China is also important, holding about 11% of global reserves and controlling 60-70% of refining capacity. Tighter supply-chain control, combined with persistent deficits and rising industrial demand, supports the “long-term outlook for silver despite near-term price volatility”.

How should investors allocate between gold and silver?

For investors seeking diversified precious-metals exposure, Tata MF suggests 70% gold and 30% silver as a broad strategic framework. Gold provides greater stability and defensive characteristics, while silver offers exposure to long-term industrial-growth themes.

Given silver’s higher volatility, Tata MF favours a “staggered investment approach with a medium- to long-term horizon.”

Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.