Gold glitters as top investment in 2025 with 65% return; equities follow

By Nishel Fernando
The investors who hedged their bets on traditional safe havens were the clear winners in 2025, as gold emerged as the standout asset class of the year.
According to the new data released by market intelligence firm Sparkwinn Research, the yellow metal delivered an extraordinary annual return of 65 percent for a gram of 22-karat gold, significantly outperforming the equities and fixed-income instruments.
The surge highlights a pivotal shift in investor sentiment, proving that despite the increasing reliance on complex financial modelling, fundamental assets continue to have the final word in wealth preservation. Sparkwinn Research noted that while analysts spent the year dissecting technical charts, the market ultimately rewarded those who trusted the simplest assets.
The Colombo Stock Exchange also witnessed a robust year, providing a silver lining for the risk-takers, who moved away from fixed income. The All Share Price Index generated a strong return of 34 percent, marking a significant recovery for the equity market. This performance suggests a renewed appetite for stocks, likely driven by the lower interest rate environment that prevailed throughout 2025, which forced capital out of bank deposits and into higher-yielding avenues.
In stark contrast to the double-digit returns of gold and equities, traditional savings mechanisms offered modest gains. Fixed deposits, long considered the staple investment for the average Sri Lankan household, offered an annual return of only 8 percent based on the Average Weighted Fixed Deposit Rate. This single-digit return environment indicates a stabilisation of monetary policy by the Central Bank of Sri Lanka compared to the previous volatility, yet it underscores the opportunity cost faced by the conservative investors, who bypassed the commodities rally.
The real estate sector maintained a steady, albeit slower, upward trajectory. Data indicates that land valuation, based on the Central Bank’s Land Valuation Index, grew by 14 percent. These returns, primarily reflecting data from the first half of 2025, suggest property remains a hedge against inflation, though the liquidity constraints likely kept it from matching the explosive growth seen in the gold market. Unit trusts and other funds delivered a 10 percent return, slightly outpacing fixed deposits.
The massive divergence between the 65 percent return on gold and the 8 percent on cash deposits serves as a critical lesson for portfolio diversification as investors look toward 2026. While data and strategy remain critical, the performance of 2025 serves as a reminder of the power of assets that have stood the test of time.