Gold price hits record high: Should you buy now or beware?

As the prices of gold in India soared to record levels this week and breached the Rs 1.02 lakh mark on Friday, the market experts believe that this surge is fuelled by US President Donald Trump’s tariff policies and a broader flight to safety.

“Uncertainty over the long-term reliability of the US dollar is prompting a global shift towards gold, with central banks actively reallocating reserves as a hedge. Coupled with rising geopolitical tensions, these factors have significantly strengthened gold’s safe-haven appeal,” Rahul Singh, CIO – Equities, Tata Asset Management shared with ETMutualFunds.

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Another expert lists several factors that have contributed to this surge in the gold prices which broadly includes a combination of macroeconomic and geopolitical factors.Firstly, the softness in the U.S. labor market and consumer spending has raised concerns about a broader economic slowdown and at the same time, expectations of a dovish shift in Fed policy are weighing on the dollar, pushing the greenback below the 98 level and further supporting gold, Kaynat Chainwala, AVP – Commodity Research, Kotak Securities told ETMutual Fund.“Adding to the rally, reports that the U.S. has imposed tariffs on imports of one-kilo gold bars, the most commonly traded form on COMEX, sparked supply tightness fears, pushing COMEX futures more than $100 above spot prices. Prices hit a record high of $3,534/oz on COMEX, with MCX gold breaching Rs 1,02,000 per 10 grams,” Kaynat added.
According to a report by ET Markets, Gold October futures prices at MCX on Friday hit another new all-time high of Rs 1,02,191/10 grams, driven by US trade tariff uncertainty and safe-haven buying by global central banks.
Looking at the current gold price level, the important thing to know is should one increase, reduce, or hold their current gold allocation?
In response to this, the expert from Kotak Securities responded that Tariff-driven inflation risks, combined with signs of a cooling US labor market, have increased stagflation concerns and alongside a high probability of a Fed rate cut in September, the outlook for gold remains bullish. Further, a buy-on-dips strategy appears prudent, with entry levels around $3,350/oz in spot gold and Rs 1,00,500/10 grams on MCX.
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On the other hand, Singh says that gold should be maintained as part of a long-term core allocation and with a weakening US dollar and rising geopolitical uncertainty, even central banks are considering diversifying into gold as these assets act as a hedge against global financial instability.

Therefore, they should not be treated as short-term bets but rather as strategic portfolio allocations. While slight tactical changes may be made based on price movements, the fundamental role of gold as a strategic hedge against systemic risks supports continued holding over a 3–5 year horizon, he added.

There are different options to invest in gold such as in gold funds or ETFs, invest in physical gold, sovereign gold bonds, or multi asset funds.

Gold funds are used for portfolio diversification. If you have a large portfolio, you can earmark a small percentage of the total portfolio (advisors say around 10%) to invest in gold. If you are starting out or you have a very small portfolio, you can give it a miss. Investors should remember that these funds wont offer you greater returns year after year. They are supposed to offer you diversification and add stability to your portfolio.

Gold ETFs are exchange-traded funds that track the price of physical gold. Each unit of a Gold ETF is backed by a specific quantity of gold, usually equivalent to one gram. They are listed on stock exchanges, and you need a demat and trading account to buy and sell them.

Multi-asset allocation funds are hybrid funds that need to invest a minimum of 10% in at least 3 asset classes. These funds typically have a combination of equity, debt, and gold. Some schemes also add international equities, InvITs and REITs.

With these different options available, the expert from Tata Mutual Fund recommends that Gold ETFs and multi-asset funds offer strategic advantages as gold ETFs provide liquidity and ease of use, while multi-asset funds allow dynamic rebalancing between asset classes, including gold and silver, with the added benefit of equity taxation and the choice depends on an investor’s tax considerations and the level of involvement they prefer.

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Another expert, Kaynat, echoes similar opinion and said that while physical gold remains a traditional option, ETFs and gold-focused mutual or multi-asset funds offer more convenient and tax-efficient alternatives.

On the performance front, gold ETFs have offered an average return of 45.01% in the last one year and 31.50% average return in the current calendar year. On the contrary, multi asset allocation funds gave an average return of 7.16% in the last one year and an average return of 5.78% in 2025 so far.

Looking at the performance, Singh comments that gold has seen a strong rally and is now likely to enter a period of consolidation in the near term, even as its long-term bullish drivers remain intact. “In the short run, we expect prices to stabilise within a broad range of $3,000–$3,500 per ounce, as markets adjust to the impact of changes in US tariffs, heightened geopolitical tensions, and persistent concerns over US economic growth. Any escalation on the tariff front or geopolitical front may boost demand for gold as a safe haven asset on worries over higher inflation and market uncertainties,” he added.

Overall, gold continues to serve as a strong safe-haven asset, benefiting from tariff uncertainty, inflation concerns, and a weakening dollar, Kaynat said.

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Quant Mutual Fund in its monthly release mentioned that August month tends to be, seasonally, more bullish for Gold and the fund house analysis have endorsed that Gold has peaked out around $ 3,500/Oz. and a medium-term top is in place and it has potential to correct by 12-15% in dollar terms over the next two months.

One should always invest based on their risk appetite, investment horizon, and goals.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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