While Indian FDs continue to offer modest returns in the average range of 6-8%, the yellow metal has delivered double-digit gains, fueled by a perfect storm of geopolitical tensions, rate cut pauses, and President Trump’s renewed tariff threats.
Gold prices have surged over 26% or by Rs 20,800 per 10 gram in 2025, so far.
With central banks across the globe stocking up on gold and Indian consumers driving seasonal demand, bullion has reasserted its place as both a hedge and a high-performing asset.
In contrast, FDs—once a mainstay of conservative portfolios—struggle to keep pace in real, post-inflation terms.
As gold glitters and volatility reigns across asset classes, experts now urge investors to reconsider how they view this traditional store of value—not just as a hedge, but as a strategic component in a modern portfolio.Also Read: Gold creates history, hits Rs 1 lakh mark for the first time riding on dollar weaknessBut with prices already at record highs, should investors chase the rally or wait for a dip? Experts say while the rally may have more legs, investors should approach fresh allocations with a calibrated strategy.According to Manav Modi, Senior Analyst – Commodity Research at Motilal Oswal Financial Services, “Gold’s strength has been backed by multiple tailwinds. After a 100bps rate cut last year, the U.S. Federal Reserve has now paused, signaling concerns over growth and inflation. While inflation is now within the Fed’s comfort zone, the loose labour market remains a worry. Add to that the rising geopolitical tensions and trade war fears, and we have a classic setup for a sustained gold rally.”
Modi notes that beyond macro factors, demand drivers such as domestic festive and wedding seasons, central bank buying, and firm ETF inflows (like SPDR Holdings) are all supporting the bullish case. “We recommend a ‘buy on dips’ strategy. Gold could inch towards $3350–3500 in the medium term, and if momentum sustains, a rally towards $3700 can’t be ruled out,” he adds.
Domestically, this implies a range of Rs 96,500–1,00,000 in the near term, with longer-term targets around Rs 1,06,000, assuming an exchange rate of USD/INR at 85.
But not all experts are advocating aggressive bets:
In an interview with ETMarkets Rajkumar Singal, CEO of Quest Investment Advisors, advises restraint: “Gold should be treated as a hedge, not a core portfolio component. It doesn’t generate cash flows, so we recommend a 5–10% allocation to manage geopolitical and inflation-related risks. It’s a useful diversifier, especially when equities and bonds are under pressure, but not something to go all-in on.”
Sahil Shah, CIO and Fund Manager at Equirus Asset Management, echoes a note of caution, highlighting a subtle shift in gold’s traditional dynamics.
“Gold has been a standout performer, but its historical negative correlation with equities hasn’t held consistently this time. Central banks have been adding gold instead of dollar reserves, which has supported prices. But if trade tensions ease and the U.S. dollar reasserts itself as the preferred reserve asset, gold could stabilize or even pull back,” he told ETMarkets.
He adds, “Investors should continue to view gold as a strategic diversifier, but avoid making large fresh allocations at elevated levels.”
What Should Investors Do?
Gold’s surge past Rs 1,00,000 is a milestone, but experts urge a balanced approach. Tactical traders may ride the momentum, but longer-term investors are better off adopting a staggered buying strategy, accumulating on dips, and keeping allocations within prudent limits.
With a mix of economic, geopolitical, and monetary crosscurrents shaping the market, gold remains a glittering but complex asset class.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
