Gold scaling new peaks: Book profit if weight in portfolio exceeds 15%

Gold is trading at all-time highs. It is closing in on the psychologically significant $3,000 per ounce mark in the international market. It also surpassed ₹Rs 86,000 per 10 grams on the Multi Commodity Exchange (MCX).

 

"In 2024, gold posted domestic gains exceeding 20 per cent. The momentum has continued in 2025, with year-to-date (YTD) gains exceeding 10 per cent. We maintain a buy-on-dips stance," says Akash Hariani, joint managing director, Motilal Oswal Private Wealth.

 

Factors behind the surge

 

Geopolitical tensions and fears of trade wars due to anticipated US tariff announcements are the key drivers of gold prices. "Safe-haven demand for gold is rising amid concerns over global economic growth due to the new US administration’s protectionist policies and their inflationary impact on US domestic prices," says Gnanasekar Thiagarajan, co-founder and chief executive officer (CEO), Commtrendz.

 

Outlook for yellow metal

 

Strong demand for exchange-traded funds (ETFs), an expected revival in Chinese gold consumption, and steady Indian imports are likely to keep prices firm. "Since the start of this year, demand-supply dynamics have driven gold. Expectations of a consumption rebound in China, aggressive central bank purchases, and rising investment demand have further boosted gold demand," says Hariani.

 

Central banks’ efforts to diversify their reserves are also playing a part. "Central banks in BRICS regions are increasing gold reserves, exerting upward pressure on prices," says Bharat Lahoti, co-head, factor investing, Edelweiss Mutual Fund (MF). 

 

Trend could reverse

 

Experts advise caution at current levels. "In the medium term, if and when negotiations bring about amicable solutions (to conflicts), gold’s safe-haven appeal may diminish, triggering a strong correction," says Thiagarajan.

 

Hariani also cautions against increasing exposure at these elevated levels, especially for the short term. "Short-term investors may face challenges. Policy shifts by the Federal Reserve (Fed), easing global uncertainties, and a slowdown in central bank purchases could limit price growth in the medium term," says Hariani.

 

Investment options

 

Physical gold remains an option, but mutual funds offer a more convenient way to gain exposure to gold. "Gold ETFs provide a convenient and efficient way to invest in gold without having to handle physical bullion. Investors without trading and demat accounts can consider gold funds, which invest in gold ETFs and offer similar benefits," says Satish Dondapati, fund manager, Kotak Mahindra Asset Management Company (AMC).

 

Multi-asset funds, which allocate investments across stocks, bonds, and commodities while rebalancing regularly, also offer a viable option for exposure to gold.

 

Recommended allocation

 

Experts suggest a staggered approach to investing in gold after the recent surge. "Investors should allocate 10-15 per cent of their portfolio to gold and silver for diversification," says Lahoti.

 

Seasoned investors may consider portfolio rebalancing. "If gold’s recent surge has increased its allocation beyond 15 per cent in your portfolio, now may be a good time to rebalance. Additionally, if you need liquidity for short-term goals, booking profits from gold investments could be a prudent decision," says Abhishek Kumar, Securities and Exchange Board of India (Sebi)-registered investment advisor (RIA) and founder, SahajMoney.com.