How much should you allocate to gold in your portfolio this Akshaya Tritiya?

In early 1980, investors, according to Capitalmind, were inspired by the stellar returns of the 1970s. If they invested in gold back then, they would have faced two decades of negative returns.

With gold prices scaling past the ₹100,000 per 10 grams recently and making the yellow metal out of reach for some, is it still advisable to buy the yellow metal at the current prices this Akshaya Tritiya, and how much money should allocate to gold in your portfolio?

 

According to a note by Capitalmind Financial Services, gold portfolios with just a 5–10 per cent allocation to gold often achieve better risk-adjusted returns than equity-only portfolios.

 

“50:50 portfolio of gold and the Nifty 50, rebalanced annually, outperformed standalone investments in either asset over more than two decades. This counterintuitive result underscores the Lindy Effect in action — where longevity and resilience in systems or strategies increase their likelihood of enduring success," the note said. 

Gold returns

 

 

In early 1980, investors, the note said, were inspired by the stellar returns of the 1970s. If they invested in gold back then, they would have faced two decades of negative returns.  

 

“In early 2000, after dismissing gold during the poor-performing 1980s and 1990s, investors would have missed its massive rally in the 2000s. This unpredictability underscores why systematically rebalancing portfolios is critical,” the note said.

 

Why are gold prices rising?

 

The recent rally in gold that took the prices of the yellow metal past the Rs 100,000 per 10 gram mark in India has been triggered by US tariff fears as it fueled safe-haven demand.

 

The $800an ounce price surge in gold in 2024/25, analysts said, is related to trade-related uncertainties. Yuan depreciation (19-month low versus trade partners’ currencies) also accelerated gold buying as a safe-haven asset.  

Gold returns USD vs INR

 

“The returns on gold in INR and USD were fairly similar up until 1990, largely due to India’s capital controls and protectionist policies. However, the post-1991 reforms, including trade liberalisation and currency decontrol, entrenched a more market-driven exchange rate,” Capitalmind said.

 

Gold price outlook

 

Analysts feel there is more steam left in gold price rally and investors should use the dips to buy the yellow metal. Analysts at Motilal Oswal Financial Services (MOFSL), for instance, expect gold prices to hit the ₹106,000 mark in the long run.

 

“Investors can start accumulating gold near ₹90,000-91,000 for the long-term targets of ₹106,000. The metal has resistance near ₹99,000 levels,” wrote Manav Modi, senior analyst for commodity research at MOFSL in a recent report. READ ABOUT IT HERE

 

Gold demand outlook

 

One casualty of the surge in prices, according to analysts, could be retail demand for gold. A Crisil Ratings analysis of 60 gold jewellery retailers, which account for a third of the revenue of the organised jewellery sector, indicates as much.

 

In fiscal 2025, retailers, according to Crisil Ratings, took a 4 – 5 per cent hit to volume as gold prices soared around 25 per cent on-year amid geopolitical and economic concerns. As of mid-April 2025, gold prices are already nearly 20 per cent higher than the average price in fiscal 2025.  

 

“The recent jump in prices came just before the start of the festive and marriage seasons in the first half of April 2025, limiting the impact on demand thus far. However, as ticket sizes for buyers are likely to remain constant, caratage and grammage may reduce, as seen in the last four fiscals, impacting volumes. The demand, though lower, remains supported by duty cuts on gold imports announced last year,” said Himank Sharma, director at Crisil Ratings.